The Petalumahomes.com Realty WebLog

I was showing properties to a customer this past weekend with the following search criteria:
-Price from $375,000-$430,000.
-Status had to be “active” meaning fully available.
-Single detached homes (no attached or condos wanted).
-2 plus bedrooms.

There were a total of20 listings that fit the criteria. Of those 20 available listings, 11 were short sales, 2 were bank owned, and the rest were seller owned properties. So 13 out of 20, or 65% of the homes, had a lender issue as the reason for selling. I have never in my 31 years of actively selling homes seen this high of a percentage of distressed sales. If there were ever a reason to consider buying this would be it. But if you want to take advantage of this market here is some advice I think you should use.  

First shop the “REO” or “bank owned property” listings. Then second look at the “SOP” or “seller owned property” listings, and last look at “short sale” listings.  I can already tell that you’re surprised that I would put “short sales” last, well, here is my reason. Most short sale listings are not a true lender approved short sale. Generally, I find that these listings are sellers that are upside down in value (upside down means you owe more than your home is worth); they have listed their homes at a low value hoping to attract an offer. When the listing agent gets the offer they will deliver the offer via several methods to the owners’ lender(s) and see if they can get the lender to accept less than they are owned on the loan.  More often then not the lender has never even spoken with the listing agent or seller about the idea of getting paid less than they are owed so you can imagine their first response.

To be a true short sale the seller has a very extensive application process to go through before the lender will agree to play ball. But the real problem is that rarely will the lender go along with this plan and generally it can takes weeks to get an answer which is most often “no”. During those weeks of waiting you the buyer could be missing out on another great home opportunity thinking you have a chance of making a deal with your current offer. Make sure if you going to get involved with offering on a  short sale listing that your agent/broker has some experience in doing them. They will make sure before you even make an offer that the listing agent has gotten approval on a price that the bank is willing to accept. I have seen first hand and have heard even more stories about buyers getting their time wasted waiting for a seller to get approval from their lender. If they can show you in writing then you will have a much better chance of making a deal but you are not, I repeat, not in anyway out of the woods at this point. You have just increased your odds of being successful and maybe closing escrow. There is much more I could tell you but since this is a blog lets do blog together.

In conclusion, the sad truth is that you are better off looking to buy a “REO” listing or a normal “SOP” seller owned property because you have a real seller to deal with. And the other sad truth is that most so called short sales end up as an “REO” so you may get a chance down the road.

Well, happy house hunting for now and don’t sit on the fence too long, you might just get some splinters.

-Robert