Why Buying a Short Sale Isn't the DEAL You're Thinking It'll Be
A few points:
1. Value is based on BPO results. I still get them at a great price because the BPO is made aware of at least 3 recently sold and 3 low active comps.
2. You might want to look at FHA rehab loans so you don't limit yourself to cash buyers. Also make sure you have high contractor bids to help reduce value of the short sale listing.
3. It is incorrect to assume you cannot get seller concessions. If the bank shoots it down, you should have a padded HUD so you can reduce the buyer's cost in the transaction, so they can use that money for repairs or reduce their debt.
Why Buying a Short Sale Isn't the DEAL You're Thinking It'll Be
I've been a Northern Virginia Short Sale Agent since 2007. I've dealt with banks that took 18 months to approve a sale. I've dealt with losing buyer after buyer on a Short Sale listing. I've had a two week approval turn around. I've had banks set list prices on my Short Sale listings. I've seen the very bad and the very good. And since 2007, things have changed a lot.
From 2007-2009, you could get a great deal on a Northern Virginia Short Sale. The market value was dropping like a stone and the banks were the first ones to come to grips with it. It's one of the reasons you hear so many home owners complaining about how the banks ruined values. They didn't. Supply and demand did and the banks figured out the market value first. They weren't afraid to drop their prices like regular sellers.
In 2010 and into 2011, the Northern Virginia market started to right itself and the supply of homes was more stable. So Short Sales and regular sales seemed to be selling for about the same price. Why? The banks did BPOs to find market value, as they have always done, and wouldn't take a penny less.
Now, in 2012, we have a shortage of homes. This means prices are rising. This also means Short Sale Banks don't want to leave one single dime on the table. It's not uncommon to see banks countering sales prices that were slightly below market value at the time of contract to get the value to market value or even slightly above. Yesterday, one of my very own Short Sale Listings, a Bank of America Cooperative Short Sale, where the bank SETS the list price had a contract that was countered for the THIRD time. All of a result of additional BPOs banks are doing to make sure they are getting every penny out of the sale. The first counter raised their own acceptable price by about $2,000 (still below market value.) The second counter raised the acceptable price by $3,300 (at or still slightly below market value.) The third counter that made the buyer walk would've raised the sales price over $13,000. Sadly, the buyer was an investor who thought they could get a "deal." Sadly, they walked from a Short Sale that is within market value. They just had unreasonable expectations because they thought a Short Sale would be a steal.
So if you are shopping in Northern Virginia in 2012 thinking you are going to get a deal on a Short Sale, think again. The banks want market value as much as regular sellers do.
Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155. To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com. Or you can visit her website: www.nvarealestate.net.
Header is a combination of photos from the Bristow, Gainesville & Haymarket areas, taken by Chris Ann Cleland.
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