If you happened to scan real estate news headlines lately while you’re home hunting, you might already know that housing supply is still low, resulting to a corresponding rise in home prices. This, on top of current low wages does not help you much in finding a viable home without competition.
If there are many buyers interested in a property, you have to participate in a bid war and convince the seller that you are the best buyer. That is not always easy, especially when your rivals have cash money to sweeten their deal. When this is the case, you might start to consider shifting your focus into distressed properties which have price tags within your budget and lesser competition.
Is a short sale the answer you’ve been looking for to start your home buying goal?
What are short sales?
A short sale proceeds with the purchase of a distressed property. These properties are those which carry more debt than that they are worth in the market. With a short sale, a purchase can be done wherein all lien holders of the property agree to accept lesser than the debt amount, forgives the debt, while waiving foreclosure procedures.
Foreclosures are very damaging to the credit of distressed property owners; short selling is usually the easiest route out of this dilemma. And for a buyer looking for an affordable home, this is one of the most beneficial option.
Still, it’s careless to assume that buying a home via short sale is always the easiest option. Why?
You Need Time
The average time to fix a sale on a house via short sale is about six months to a year. Yes, it could be that long. That is because you need to settle with all lienholder parties involved and satisfy their payment conditions before all can move on.
If you are planning to move in the next couple of months, a short sale may not be for you.
You Still Need Cash
Even though the properties could be cheaper than a traditional property, you need to make a strong offer, usually by way of paying a higher down payment. Experts advise that you put 25 to 40 percent right out on the property. Lien settlements can cost you and if you are genuinely interested in the property, the best way to reach a resolve is to take part in the settlement of said liens, on top of paying for the repairs on the property which, although less common in distressed properties than those foreclosed, are also not unheard of.
Short Sales Are Not Your Only Options
It’s easy to filter your listing search to short sales when you’ve made up your mind, but it’s not wise to assume that it’s the only place you can look for. It might be rare, but traditional listings also churn up good offers. Considering a market that continues to raise home prices, it might be better to settle for traditional property purchase than covering for the time and cost needed to pay upfront for a short sale.
Finding a good deal on a home definitely requires extra time and patience in a seller’s market. But just because there is a shortage of available homes does not mean you will have to jump right into the first cheap home you can find. Short sales, especially, are tempting; that fact, in itself should prompt you to do some double checking.
If you ever did settle for a purchase, make sure to do a home inspection. The home inspection phase allows you to diagnose physical problems with the property such as structural issues, pests and molds, etc. Also extend your research on the home’s status and check if all renovations have been permitted and approved. Lastly, ask assistance on cost estimates and do your math. Calculations can guide you in deciding whether the sacrifices you need to make on the deal is worth it.