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Lately I've had several homeowners with equity in their homes (yes, there are still plenty of you out there despite media reports!) express concern with selling their homes in this market.  Feeling threatened by the short sales and foreclosures, they hesitate to put their home into what they see as "shark infested" waters.   Here is some the advice I've been giving them.

You will have to compete, to some extent, with some of those "short sale/foreclosure listings".  The obvious advantage to these "distressed" sales is the opportunity to scoop up a good deal.  However, keep in mind that these distress sales have their disadvantages, too.  Short sales take time, have delays and  require third party approvals throughout the process. Lately I've seen several buyers who don't want to be bothered with them.  They ask me up front if my listing is a short sale.  Foreclosures also have their disadvantage, too (lack of history on property, limited information regarding the condition of the property since the homeowners are out of the picture, the need to take the property "as is", etc). 

A regular sale by a homeowner has value, and the market is starting to recognize it.  Not everyone has the time or wants to stomach the distress sale.  They are willing to pay market value for a standard sale--a home with a living, present home owner--a traditional sale.

For homeowners who have some equity, it really can be a great time to sell.  While you have undoubtedly lost equity compared to what you had a year or two ago, the price of your replacement home has also gone down.  One of the hidden benefits to these drops in values is lower property taxes--a great long term financial benefit.  If you plan to move up, you'll pay much lower property taxes than you would have a year or two ago!

If you'd like to discuss your particular situation (your equity, home's value, values of potential replacement homes) and some of the benefits of buying and selling in this market, give me a call or email me.

Wishing you the best.  Melinda Johnson, Freedom First Properties. (714) 863-5485

Purchasing a short sale is not at all like a traditional purchase from a homeowner.  If you bought a home a few years ago--a short sale purchase is likely going to be nothing like that transaction.

In a typical real estate transaction, the Buyer makes an offer to the Seller and Seller has a few days to get back to the Buyer with an answer--accepting the offer, rejecting the offer or making a counter offer. Waiting those "few days" for the Seller to respond can often be emotionally exhausting for some buyers.  If you are that kind of Buyer, prepare yourself, a short sale is a long, bumpy ride in comparison to those "few days".

In a short sale, the Buyer makes an offer to Seller and then waits. And sometimes, waits and waits and waits.  While the Buyer is waiting (and waiting), the Seller's agent submits the offer to the bank.  Since it is a "short sale" (meaning the bank is agreeing to accept less than its loan balance), the bank gets to approve the sale.  And that takes time.

To save time, some banks will pre-approve a price range--but they typically still will review the file once the offer is in.  Some will not pre-approve a price range at all and will not assign anyone to the Seller's file until there is a written offer (from you the Buyer) in hand.  This means that no one at the bank has even reviewed the file before your offer is submitted to the bank for its consideration.  The bank may need to perform a detailed review of the Seller's financial situation--and in the meantime, you wait. Depending on the work load of the person at the bank reviewing the file, this can take some time--weeks to a month or more.

You must also be prepared for more potential delays as the transaction moves thru escrow.  Any changes to the deal may also need to be approved by the bank--it’s just not up to the Buyer and Seller.  There is third party who has a say (and does not always rush to say it). 

So why bother?  A short sale can be an opportunity buy a home at a great price.  The bank is willing to deal because they don't want to take the property back as a foreclosure.  The Seller is willing to deal because they are not going to get any money out of the sale--they just want a price the bank will approve.  The Seller simply hopes to avoid a foreclosure.

So, patience is a virtue, one for which you can be well paid, especially in a short sale. 

Happy home shopping!

Have a short sale, foreclosure/REO, or other real estate question?  Email me at johnsonlaw@sbcglobal.net or call me @ (714) 863-5485

Melinda