Why Short Sales Are Not So Short
A term that is becoming more popular in the real estate world is “Short Sales”.
Short sales usually apply to homes where the owner owes more money than the home can be sold for. Short sales usually apply to homes that are behind on their mortgage payments. These homes are often referred to as pre-foreclosures.
Banks don’t want homes to foreclose, so will accept less money than is owed for the property to keep it from foreclosing. Banks usually won’t approve a short sale unless the owner of the property is behind on their payments.
We are seeing so many more “Short Sales”. Why is that? The main reason is because home prices went too high. A large portion of home buyers purchased these homes with little or no money down. When home prices started to decline, the homeowners had no equity.
When you want to make an offer on property that is for short sale, you need the approval from the Bank, sometimes multiple banks. Because the homeowner won’t be getting anything out of the sale, they may be, and often are, unmotivated and uncooperative.
Banks can be very slow to respond sometimes taking months before they will even look at a file. They are overwhelmed by the number of short sale requests they now have. Most banks usually won’t even look at a short sale file until someone makes an offer.
Often the homes for short sale will be listed at a very low price i order to get a offer quickly. It is also common for the listed price to not be enough to be approved by the bank.
Trying to buy a short sale home can be a very long process. Just because it is called a “short sale” doesn’t mean it will be a short process
In Cache Valley they have much less short sales than in the rest of Utah. The prices of homes for sale in Cache Valley never rose too high, so its the decline of home prices hasn’t been as dramatic as most places. In Cache Valley only less than 7% of homes sold are short sales .
This link will show you all the current Cache Valley Short Sales for Sale
Alan Barker
The short sale pain seems to be everywhere… I work in the San Francisco Bay Area and short sales are becoming more common. Unlike what you described in Cache Valley we have homes that in some instances have seen close to a 50% reduction in value. That is an uphill battle for sure. I really do hope that the banks streamline the process to help the sellers of these homes as well as the buyers. We shall see if they really do adhere to the new HAFA guidelines…