Too Many Cooks Spoil the Stew
An article in the April 17, 2008 Wall Street Journal clarified some of the reasons why you should think twice before buying a short sale home. Not only do the buyer and homeowner need to agree upon the sales price, but the mortgage-holder needs to be involved in that decision as well.  In addition, if the loan was “packaged into securities..the mortgage servicer must consider the interests of the investors who own the loan.  All of these “hoops” lead to long delays before a decision is reached.  The WSJ article indicates that, nationwide, short sale deals are difficult to close and that buyers end up walking away from the deals out of frustration. I am finding the same to be true in the Santa Maria and Orcutt area, where most of the foreclosure properties  I list are located. 

But the WSJ article did not mention something that I think gives even more reason to avoid short sales.  Buyers can save more money on properties that have already been through foreclosure.  Here is a perfect example: I recently sold a bank-owned home that had been through foreclosure.  Ironically, I was the listing agent for the same home several months earlier when the owner tried unsuccessfully to sell it as a short sale.  Prior to foreclosure, we received an offer that the bank rejected.  But the offer that the bank accepted AFTER foreclosure for the SAME home was LESS than the offer it had recieved while we were trying to sell the home as a short sale.  To me the moral of the story is clear:  it pays (in both time and money) to go after bank-owned foreclosures instead of short sales.

If you’re curious about how to buy a house in foreclosure, check out this article: http://www.homescentralcoast.com/tips_for_buying_foreclosures.html