What is a short sale? To keep it simple, we can define a short sales as home extensions melbourne a scenario where a lender agrees to accept less that what is owed on a mortgaged property in exchange for considering the debt satisfied. If a bank approves it, it is because for them it presents a better alternative than taking the house through the foreclosure process and selling it into the current open market. Well cover this topic in greater detail later on.
The main advantage to buying on a short sale, of course, is the ability to buy discounted property, without the constraint of what the current lien on the home is.
However, there are certain disadvantages, too. First of all, short sales have to be approved, so its not a sure thing. Second, its hard to say when the approval will come through (if it comes through), so often a buyer will put in a offer and then have to wait several months to find out whether the offer was accepted so the waiting for an uncertain outcome is definitely a downside. Related to all of this, short sales involve a LOT of paperwork, and if the paperwork is not done correctly and to the requirements of the banks loss mitigation department, it could delay or even sabotage the whole effort. If you are looking to short sales a source for your investment properties, it would be good advice to make multiple offers and not put all your eggs in one basket.
Short sales represent a great opportunity for investors. However, the number of opportunities to find a good deal vary by area. The greater the spread between the current value of the house and how much is owed on it, the more incentive the bank has to cut a deal. This is the scene you see today in those parts of the country where home prices shot up the most sharply (high amount owed because all the new homeowners took out big mortgages to pay for homes at inflated prices) and then came crashing down the most sharply, too (low home values) .
In Santa Clara County, though weve certainly ridden the roller coaster up and are now riding it down, thing arent as bad as they are in other places. Recent data shows that for single family homes listed for sale on the MLS in Santa Clara County, only about 20% of them were short sales. Looking beyond volume, the true question is really, what is the typical discount in this areas on a short sale vs a normal sale? I dont have the answer to that, but if anybody else does, I would love to hear.