The Only “Advantage” of Buying a Short Sale

When it comes to short sales, it’s often quite hard to see any positives in these transactions. The homeowners can no longer afford their mortgage payments, are on the brink of foreclosure, the prospective buyers are frustrated with the process unaware wether the sale will be succesfull or not, and the agents involved get the cold shoulder from the lenders who fail to respond in a timely manner.

In a previous blog I showcased 3 Things to Consider When Buying a Short Sale. These were ment, not to deter prospective homebuyers from purchasing them but simply to draw awareness to the stresses involved in these types of transactions.
I’ve written several articles about short sales as of late, in part because of a stalemate my client and I are facing with a second lender. This challenge had inspired the descriptive Blog: Why Is The 2nd Lender So Stupid?

So today I search for a positive take on short sales. Many would argue there are none but I did manage to find The Only “Advantage” of Buying a Short Sale. I use the term advantage loosley since it’s all subjective to your market conditions, lenders and experience of the real estate agents involved in the transaction.
So what is this “Advantage”?

Discounted Purchase Price
So before you run out and low ball every short sale you can find, let me explain what I mean.
In the short sale, the asking price is decided not by the banks but by the real estate agent who has secured the listing. Most agents will price the property 5-10% below market value to draw several offers in a short amount of time, producing a multiple offer situation which will result in an offer at market value. The true potential a prospective buyer has is in locating short sales which have been over priced, and have been on the market (without an offer) for at least 30 days.
The primary objective for the listing agent of a short sale is to get an offer to the bank as quickly as possible regardless of terms and price. Of course this is all within reason since A)The banks will do a mini appraisal called a BPO to confirm the purchase price falls within a specific range. And B) It is in the best interest of the agent to get the highest offer since their paycheck is calculated as a pecentage.

What this means for you
Yes, offers reasonably below market can and will be accepted should there not be any competition from other prospective buyers.
With the right homework and real estate professional, one can take advantage of short sales for instant equity as long as you understand what the Short Sale process consists of and are fully prepared to endure it.