Over the last year or so, the real estate market has become saturated with distressed properties. There are several advantages for the buyer in selecting this type of home when it fits their needs. This has never been more true than today.
As you know, a short sale home is one where the owner owes more than the current market value. In other words, the homeowner most likely paid a lot of money for the house during the boom years and now the house has depreciated significantly. In order for the owner or seller to put the house on the market now, he must get approval or permission from his mortgage company to sell the house for less than he paid for it.
The length of time it has taken for most mortgage companies and banks to approve a short sale application has left a “bad taste in the mouth” among buyers, sellers, real estate agents and anyone else directly involved in the transfer of assets. estate. In the past, this timeframe typically took 4-6 months to approve a buyer’s offer on a home.
With so much delay in the approval process, many buyers and their realtors have tried to avoid making offers on these homes. This unconventional delay has caused hardship for the buyers and sellers involved. It has also been one of the reasons that foreclosures have been on the rise.
The government recently passed a new Federal Law that gives the bank just 10 days to approve a buyer’s offer in these short sales. It hasn’t happened yet, but there are some encouraging signs as banks are making more efforts to comply with the new law. Short sale applications in some cases get approval in less than 2 months. This is a great sign, but nowhere near as long as it should take to approve a buyer’s offer.
A house owned by a bank is synonymous with foreclosure. Although this type of home requires approval, it is dealt with directly since the bank already owns the home. These types of distressed properties typically get approved within a few days.
The time of acceptance of a home owned by a bank or a foreclosure compared to a short sale is still the difference between day and night. However, it is putting more urgency on short sale banks to speed up their approval process.
As more and more bank-owned homes come on the market, the home short sale process becomes more competitive. One of the drawbacks of a bank-owned or foreclosed home is that they receive multiple offers as soon as they come on the market. This sounds strangely familiar to the 2004-2005 eras. Most buyers don’t like to make offers to each other, but the upside is that the buyer will know in a few days whether their offer was accepted or not. If it is not accepted, they have wasted little time and can move on to finding another home.
If a buyer finds a short sale home that meets their needs, never hesitate to make an offer. The buyer should continue looking for houses in the meantime. If they find a bank-owned or foreclosed home but haven’t been approved for the short sale, they should ask their real estate professional how to search for the bank-owned home.