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Real Estate Short Sales, Is It Worth It?

Pensacola real estate foreclosuresA few years ago, very few people, including real estate agents, had heard the term “short sale”. With the growing foreclosure rate, short sale is now a well known term to both real estate professionals and many consumers.

A search of the Pensacola MLS shows that in February of 2012, of 3511 residential homes for sale on the Pensacola real estate market, 594 are short sales or foreclosures. That amounts to 17% of the homes on the market. Contrast this figure to the data on the original publication date of this article back in March of 2008. At that time, of 6693 residential properties for sale, 417 were short sales or foreclosures, or 6% of the properties on the market at that time. You can see that there has been a drastic increase in short sales and foreclosures over the past 4 years as a percentage of active listings for sale.

For  statistics on Pensacola Foreclosures and Short Sales from March 2010, see the article Pensacola Foreclosures.

For those not familiar with the term “short sale”, think of a short sale as a pre-foreclosure sale.  You are purchasing from a very motivated seller who needs to sell to avoid foreclosure. And you are negotiating with a motivated lender who wants to get their money, but doesn’t want to own a home.

For the lender, foreclosure can be an expensive proposition, due to the fact that many buyers owe more on their home than the home is worth. The lender has to pay all the legal fees process the foreclosure through the legal system, and then turn around and pay all the fees related to selling the home. For these reasons, banks are often willing to accept less than is owed on the home just to avoid losing more money on a foreclosure.

But how good of a deal can you really get buying a short sale? And if you are a seller, what are the chances of getting your bank to accept a short sale? Are the banks really motivated to sell at a discount?

The answer to these questions is that “it depends”. Every bank is different, and every situation is unique.

I read a post on the real estate site Active Rain regarding experiences that many agents were having with short sales. I wanted to share assorted quotes from this post with my readers so everyone could see the reality behind short sales, which are often advertised as the way to get properties dirt cheap in this market. These quotes are from the author of the article and from agents who left comments. The bank names have been removed.   Pensacola Foreclosures

Real estate agents now have a much better understanding of short sales than they did back in 2008. And they have experience working short sales, so it is more likely that short sales will get to closing. However, I would still heed the advice of the agents comments above and be wary of the short sale. And real estate agents also need to be wary of giving advice on short sales. Agents are now being sued for providing what can be considered legal advice to clients regarding short sales. See Hey Short Sale Expert…Do You Have a Good Lawyer?

 

Related Articles On Pensacola Real Estate News:

Free Legal Advice For Florida Homeowners Facing Foreclosure

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  1. Phyllis Harb

    Great post! Easy to understand!

  2. ReVeLaTeD

    I think the problem with Short Sale vs. REO is the fact that, in the lower price ranges, the short sales are usually the better properties. REOs often have been neglected for untold periods of time, whereas the short sale might have only been without an occupant for a month or few.

    In my searches I found 100% of the bank owned properties to be utter garbage, not marketed to sell to someone looking for a residence, but rather to look appealing as “fixers”. Me being in the hunt for my primary residence I expect it to look somewhat decent. It’s almost criminal the way some of these properties are just thrown out there nowadays.

    When you buy a used car, there are usually standards to be adhered to – cleanup of the vehicle, etc – so why can the same not apply to homes on the market? I just don’t understand.

  3. Bob Hanley

    I list and sell many short sale properties as well as REOs. It’s been my experiance that the bank owned properties are in better condition. By that I mean that the left over household good and trash has been cleaned up. Some of properties are in excellant condition. Most of the short sales are neglected although there are some that are in great condition. Lets face it, former owners of both have had money issues, so the buyers get a discount for their condition.

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