“Short Sales…to buy or not to buy?”


    It’s no longer a mystery these days that Foreclosures and Short Sales are hot-topic items in Real Estate. Even in Nashville, no neighborhood is exempt from this smokin’ hot buyer’s market where discounted home prices seem to be the driving factor that causes a quality home to sell quickly.

    But a Short Sale, albeit a discounted price, is typically anything but a quick transaction.

    “What is a Short Sale anyway??” If I had a dollar for every time I get this question I could take a longer vacation in the off season! My initial reaction, I admit, is to cringe. And my first thought, if this person is a buyer with a goal to purchase in the next 6mths, is to point and say “Hey, is that a bird…..a plane…??” as I run away while they search the skies for Superman! But instead, I take a deep breath, give them a look of sincerity and say…

    “Well, to the best of my understanding and experience, a Short Sale is a listing being offered For Sale by an owner who, due to the negligence of not making mortgage payments over the last year or more (granted, some people lose their jobs), is facing foreclosure and is trying to sell his/her home at a price that is less than what is owed on it. This hypothetical sale would be a loss to the bank who owns the loan and would ideally allow the seller (and the bank) to avoid the foreclosure process all together. The reason I say this is a hypothetical sale is because all too often the seller, and Realtor who are marketing the property, have not completed their homework to alert the bank of what they are attempting to do; but even if they have gone through the proper channels, the entire scenario has to be approved by an executive manager at the bank who’s job description most likely does NOT include signing off on losses! So essentially, a Short Sale seller is offering you their home at a price that is below what they owe on their mortgage, which is not fully approved by their bank, and for all intensive purposes is not their home to sell in the first place because they haven’t been paying for it! Now, the kicker for you, Senior Buyer, is that you have to sign a contract with this seller to even get the process started ; obligating yourself to both the time and red tape involved in completing the process, for as long as it takes the seller’s agent to get a response from the bank to acknowledge that there is a contract on the home. I’ve seen this process take months! And did I mention the seller has priced his home BELOW what is owed on his mortgage, so don’t be surprised if his bank tries to negotiate a higher price with you even after you have a signed contract up front!”

    Whew…..see why I cringe??

    So, do I discourage all buyers to walk away from Short Sale scenarios? Absolutely not! That is unless they have a desire to close within the next 30-90 days.

    My experience is that Short Sales are typically for emotionless buyers who have all the time in the world to sit and wait, and get zero positive feedback in response to their offer/contract. These shouldn’t be buyers looking to re-locate on any type of timeframe, nor should they expect to receive much joy from the process of closing on their home. Short sales are hard work and frustration from start to finish! Ever try reasoning with a stubborn teen who just wants to be locked in his room w/ the music blasting??! You get the picture. The bank you have requested this discounted deal from is in no hurry, nor do they take pleasure in completing such a transaction.

    But is it worth it in the end to get a good price? Maybe. I always encourage my buyers to allow me to show them similar homes in the area that are for sell by REAL LIVE sellers who have priced their homes aggressively and can actually sign the dotted line themselves. I enjoy helping buyers accomplish whatever process they set out to pursue in Real Estate, but I couldn’t sleep at night without a fair warning to all that Short Sales just aren’t always what they’re marketed to be!

    **For more information on Short Sales or any other great homes for sale in Nashville, email Andrew@nashvilleonthemove.com

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