Pros and Cons of Buying a Short Sale

In particularly hot housing markets, buyers may find they need to expand their home searches to include distressed properties, such as short sales. When inventory is low, incorporating distressed housing can help increase buying options, and in some cases, even score a great deal. Here we’ll take a look at short sale properties, what they are, as well as the advantages and disadvantages of buying this type of property. Is a short sale right for you? Read on to find out.

What is a short sale?
A short sale occurs when a property is sold at a price lower than the amount the homeowner owes on the mortgage, and the homeowner’s mortgage lender(s) agrees to the “short” payoff. A lender might accept a short sale with the property worth less than the balance of the mortgage, if the borrower cannot continue to make the monthly loan payment, does not have enough money to pay back the full balance of the loan and needs to move out of the property.

Benefits of buying a short sale:
The biggest benefit to buying a short sale is the price. As a buyer, you’ll secure a property at a fair market value and avoid having to deal with the risks that can come with buying a foreclosure.

Drawbacks of buying a short sale:
The short sale process may take more time than a traditional retail sale to complete and it may be difficult to pin down a firm closing date until the seller’s mortgage lender(s) agrees to the short sale. If you’re bound by a specific timetable to buy a home, the short sale may not be an ideal route.
Additionally, short sales are often purchased “as is” basis, meaning you won’t have the opportunity to negotiate for the seller to make repairs. If you go the short sale route, make sure to account for enough in your budget to make necessary repairs or upgrades.
If you’re interested in checking out short sale properties, the first thing you should do is find an agent who’s experienced with these types of sales. Metrowest specializes in distressed properties – give us a shout today, we’d love to help you start the process.

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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