Why short sales aren’t always a good deal

Prescott Short Sales - Please be Patient

I have many clients who call me looking for deals on short sales and foreclosed homes in the Prescott Arizona area market including Precott Valley, Chino Valley and Dewey-Humboldt.  Many think that short sales are better deals than foreclosures, but his is rarely the case.

What the difference?

The short sale process has many moving parts that must be aligned in order for the sale to close.  First of all, the lenders have to agree to a short sale, but sometimes banks won’t agree to a short sale without an offer.  This means that the home has been listing for a price that the bank hasn’t agreed to, and once the offer comes in, the bank will assign a loss mitigator to review the process.  This could take several months and most likely will involve a counter offer by the bank close to the loan amount…regardless of whether or not the loan has any bearing on market value.  Then the games begin.

When you buy a foreclosure in the Prescott area, the process is much more straightforward and the prices are set by the bank and not a by the homeowner and REALTOR, who have nothing to lose by listing it below market value.  In fact, it stimulates demand and clients for the listing agent and the homeowner thinks there is progress because people are looking at their home and making offers.

That’s not to say that all short sales are not good buys.  The key to success is being prepared and having a full understanding of the process.

See these posts from the blogosphere for more info:

Short Sales are No Bargain to Buyers

Is a Short Sale A Bargain