One of the popular and increasingly prevalent terms in real estate is “Short Sales”
The term Short Sale typically applies to homes that have negative equity. That is, homes where the owner owes more than the home can be sold for. Short sales usually apply to homes that are “in distress” or behind on mortgage payments. These homes are often referred to as pre-foreclosures.
Because banks don’t want homes to foreclose, they will accept an amount less than what is owed on the property to prevent the foreclosure. For this reason, banks usually won’t approve a short sale unless the home owner is behind on their payments, and has had some financial hardship that prevents them from making payments.
The main reason we are seeing more short sales now is because lending practices were too loose and home prices went too high. Most home buyers also purchased these homes with little or no money down. When home prices started to sink, these homeowners had no equity.
When writing an offer on a short sale property, you not only need the approval of the home owner, but also the approval of one, and sometimes several banks. Because the homeowner isn’t going to be getting anything out of the sale, they are often not very motivated or cooperative.
Banks also are slow to respond. It can sometimes take months before they will even get to a file. They are overwhelmed by the number of short sale requests they now have. Most banks usually won’t even look at a short sale file until there is an offer.
For this reason, Realtor’s generally price short sale homes very low in order to generate a quick offer. A lot of the time the list price won’t actually even be approved by the bank.
Attempting to purchase a short sale can be a very frustrating experience. The one thing you can be sure of is that buying a short sale is not a short process.
Living in Cache Valley we are lucky. We have far fewer short sales than the rest of Utah. Our home prices never rose as high, and so the decline has been less drastic. Currently less than 7% of the homes for sale in Cache Valley are short sales.
Click this link if you would like to view all the current Cache Valley Short Sales for Sale