Anyone working with buyers in the past few months has probably been asked this question more than once. With all the hype about the market declining, buyers are looking to get bargains right now. So what should a buyer focus on?
The obvious answer is any listed property, all of the above. Your needs as a buyer are unique to you and can't be pigeon holed into either bank owned or short sale's only. In fact, for many buyers it's easier to rule these properties out than in.
Bank owned homes are a mixed bag. Some are beautiful, even move in ready as a privately owned homes, but this is not the norm. I've been in many bank owned homes in serious need of major repairs just to be habitable. Homes in this condition may not qualify for conventional financing, and would require either a rehab loan or a substantial down payment. Bank owned homes can take time to obtain a response. Brian Leavitt, the owner/broker of Northstone Real Estate wrote a beautiful post recently about how Freddie Mac broke his heart. It's definitely worth a read if you missed it.
Short sales can be a good buy, but they are not short. Two current short sale purchases I have in process started in July and August and have no end in sight. My longest transaction took 18 months, a record I hope to never approach.
If monetary value is the only determining factor in buying a home, you well might select a short sale or bank owned property, but in doing your calculations consider time as money too. For most of my buyers I strongly urge them to lay out a criteria which is important to them, location, size, beds, baths, yard, etc and find the best available match regardless of its owner. Understand the seller's situation will influence the length of time necessary get a response to an offer and to close. If your buyers don't have time or dread uncertainty, find a non bank involved transaction which meets their needs.
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