Jeff’s Carlsbad Blog for First Time Home Buyers

Short Sales – Perhaps Not the Deal of the Century

Posted in Due Diligence,Financial,House Hunting,Short Sales,What do I Buy? by Jeff Dowler on April 3, 2007

money_house.jpgThere has been a lot of hype about the number of short sales in certain parts of the country. We certainly have a good number of them in the San Diego area, along with foreclosures, although the problem is not as serious as elsewhere.

Is it possible to find a short sale that is a great deal? Maybe.

If the property is in good condition (it hasn’t been trashed and all the appliances and fixtures taken) and it is priced well (and that, of course, depends on the lender), you may be able to snare a good deal. But very likely it will not be much less than the market value, if at all, since that is what the bank will be looking for. And they will have an appraiser do an appraisal of area comparables and will not approve a sale unless it fits within the appraised range.

The other issue is that lots of folks are looking for these deals, so a good property will get multiple offers, which tends to drive up the price.

The fact that you will have to buy the property “as is” may be an issue, too. The bank will normally not approve any repairs, which under normal circumstances would be negotiated with the sellers, so you could end up spending more money on this. Nothing wrong with that provided you are prepared to do so. Of course you will do an inspection and could decide to not proceed on that basis, too.

I am NOT telling you to not consider these as part of your house hunting, but just to be very cautious. And, of course, use a knowledgeable Buyer Agent to help you with the process.

Let me know if I can provide further information or help in any way.

NOTE: If you are an investor looking at short sales and will be buying a property you will not live in, here in California the law prohibits you being represented by a licensed real estate professional in a Notice of Default has been filed. You will need to handle it yourself or, better yet, work with a good real estate attorney.


2 Responses to 'Short Sales – Perhaps Not the Deal of the Century'

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  1. […] Read more on this subject in my previous post on buying a short sale. […]

  2. […] Are You Hunting for a Deal? Short Sales – Perhaps Not the Deal of the Century  […]

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