The term "short sale" has been tossed around in today's real estate world recently with growing frequency. It takes its place among other frequently-heard terms such as "foreclosure", "mortgage meltdown" and "slowing sales." While these terms may not bode well for the home seller as they represent higher inventory, for the buyer they can be a sign of a fabulous investment opportunity.
The short sale offers a unique opportunity for the right buyer. The question is: Are you that buyer?
Are you patient?
Short sales take time and involve a degree of uncertaintly for an extended amount of time. Because the bank is accepting less money than what the borrower owes, they are involved in the decision making process, many times moreso than the sellers themselves. Once you put in an offer on a short sale, it will take a good 3 weeks in most circumstances to even receive an answer from the bank.
Why does the process take this long?
First of all, banks are currently inundated with requests for short sales. Most are dealing with a limited staff who are typically handling in excess of 100 files per person. Many times it takes a week just to get the short sale package (including your offer) to the correct person. Once the person receives the file, he/she will order an appraisal or BPO (Brokers Price Opinion) on the property in question. The appraiser will make an appointment with the seller's Agent to view the property. Once the BPO or appraisal is returned to the bank, the negotiator reviews the asking price versus the current "market value". They will then either accept your offer or counter it.
Making Counter Offers (Read More Time Involved)
After the bank makes a decision, they may counter your offer. You then have a choice to make. You can accept their counter-offer and close the deal or you can counter their offer. If you counter their offer, they may take some time to consider it, but it won't be as long as the initial waiting period. Still, those buyers who have a time limitation on buying the home may end up taking a counter-offer higher than they originally would have been comfortable with simply for the sake of expediency. If you are not in a hurry you have the opportunity to get a better deal by extending negotiations.
Why is a Short Sale such a good deal for Buyers?
Simply put, you can get a great deal and over the next few years see very good gains in your equity. Since the bank is looking at the possibility of having to foreclose, owing the property, and then trying to sell it at current market value, they are sometimes willing to go somewhat below market value as a way of keeping their losses to a minimum. Getting a home below market value is always a good deal, of course, but considering that over the next year or so the market is expected to become much more stable, now could be an ideal investment opportunity. You don't have to be an investor to take advantage of the situation, though. Even a primary residence can make a good investment. If you have the time and a savvy agent to represent you, buying a short sale can be a tremendous opportunity in today's Tucson market.