Buying a short sale - many buyers are not very realistic!
We try our very best to explain a short sale situation from the get-go: The buyer purchased the property for $200,000 in 2007. He was unable to re-sell it for a profit so he did the next best thing: find a tenant for it. The monthly rent didn't by far cover his mortgage payment, so the seller made up the rest out of his own pocket in order to keep his mortgage current. The seller's financial resources are now used up and he is unable to sell the property for $200,000.
In today's market, the home is only worth $86,000 (market value). In a short sale, we are asking the bank to accept market value as a "short" pay off. Dear Mr. Buyer, the bank is asking for market value, so we list it as market value. The bank is taking a huge loss by selling at market value! We are unable to "get you this house for a discount price". The bank wants market value, not discount value. We are sorry but we won't write up an offer for $50,000. "Why not? Shouldn't the bank be happy to get $50,000?" Well, the bank wants market value! There's nothing wrong with the home, no known defects, the tenants have done a great job maintaining the home. Why would the bank take less than market value?
But there is hope:
You should be able to purchase the home at discount value after the bank has foreclosed on it. Please be prepared though, the property is likely to have no A/C unit and/or air handler, several windows might be busted in, there won't be any appliances and the professionally installed landscaping will be completely overgrown with weeds. As the home has busted in windows, there is likely to be damage to the carpets from being exposed to the elements, you might have frogs, bees and lizards breeding in the home as well. Hey, but now you can get the home for discount value!
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