In the last week I’ve spent a lot of time helping unravel the myths about dealing with short sales, foreclosures and bank owned properties – as a result, here are the top 7 reasons why, as a buyer, you may want to steer clear:
1. Competitive Pricing… In this soft market, short sales are not always priced competitively – sometimes equal to or higher than other similar available properties
2. The Bank calls the Shots… as it relates to the terms of the contracts; they can (and most often do) override certain terms of our Regional Sales Contract and can change terms mid-stream![Images[3]](http://northernvirginiarealestate.files.wordpress.com/2007/09/images3-small.jpg)
3. Property sold as-is… meaning there are generally no home inspection repairs or credits allowed; NOR will any walk-through items be repaired; WYSIWYG
4. The Bank holds the $$… generally in a transaction, the brokerage representing the buyer holds the earnest money deposit. However, in these cases, they will generally ask that the seller (or BANK) hold the money – not a great scenario in my book…
5. Delays? Unexpected and unexplained delays are common. Even settlement dates can come and go without any communication on status – I’ve even heard of delays up to 30–60 days… even when everyone is ready at the settlement table – loan funded and everything ready to go.
6. Closing Costs? Forget it… very few short sale situations will agree to chip in to cover any buyer closing costs…
and…..
7. HOA/Condo violations or delinquencies? Sometimes the seller is unwilling to remedy and this leaves an enormous exposure for the buyer.
I know I’ve painted a pretty gloom and doom picture – but the message is clear – if you can stay away, at least for now, the climate is not friendly for buyers who want to purchase these properties. I’m hopeful that as more flood the market, the banks will ease up and realize that they don’t want to be property owners, or property managers – just sell them and be pleasant!
Tread carefully!
Happy Wednesday
Jennifer
All very valid points. Delays? Heck yeah. From when I had a offer on my place to actual closing was over 4 months while we waiting essentially for the bank to get its act together.