Are short sales still a good deal?
Everyone loves a deal, and it used to be with short sales that you would trade time and a little risk for money-- you as a buyer would wait patiently for 2-6+ months for the bank(s) to approve the short sale at the price you offered, and in exchange, they would usually agree to a price lower than the “traditional” sales in the same market area.
A disturbing trend has surfaced lately-- after the lengthy wait, many banks have now come back wanting significantly more than contract price, and have not been willing to budge at all, even for cash buyers. And, they’ve arrived at these higher prices based on overly- aggressive valuations.
Of course, the buyer, in good faith, had offered their highest/best as of contract date, because it’s very hard to predict what prices will be 2-4 months from now.
If you’re buying a home in La Mesa or San Diego, and can no longer count on getting a great price from a short sale, is it still worth the wait? The other risks are still there; just to list a few:
1) after the long wait, the short sale is denied
2) seller stops paying HOA dues or HOA assessments; the seller is broke and the bank won’t pay, so the buyer usually ends up paying
3) mechanics or other liens surface; the seller is broke and the bank won’t pay, so the buyer usually ends up paying
4) 2nd liens create delays or problems
5) expensive but necessary repairs are discovered and the seller is broke and the bank won’t pay, so the buyer usually ends up paying (sound familiar?)
6) buyer has lost months of search time, and area prices have risen in the meantime
7) buyer tied up earnest money deposit for months
On the positive side, many buyers are aware of these risks, and have made the decision not to consider short sales any longer. Since we are getting 8-14 offers on most of our listings in La Mesa and throughout San Diego county, this could open a new window for less competition. Now instead of trading time/risk for money, you’ll be trading time/risk for a much higher chance of getting your offer accepted.
© 2013 Barb Fischer San Diego La Mesa
La Mesa, CA San Diego, CA