Discounted Home Prices on Short Sales
Have you ever shopped at one of those discount variety stores like Dollar Tree or 99¢ Only? If you’ve not heard of these stores before, you should know that everything in the entire store costs one dollar or less! In fact, when one of these chains opens a new store, they actually offer televisions for one dollar or less and they have people lined up overnight just to get the bargain!
I love the idea of getting a something good at bargain prices, and apparently I’m not the only one since these variety chains are thriving. In fact, I was recently asked if short sales be purchased at discount prices like these and whether there are certain short sale lenders that offer deeper discounts than others. The answer to these questions is not quite as simple as picking up a few items at a discount store.
Can short sales be purchased at deeply discounted prices?
In most cases, buyers of short sales will pay market value or very close to market value for the home they are purchasing. Short sale lenders know that many parts of the United States currently have low inventory and increased real estate values so they are less likely to accept a deeply discounted price for property listed as a short sale. That being said, if the property is in very poor condition (perhaps so poor that no lender would make a loan on the property), this could compel the bank to accept a lower or more discounted offer.
Which short sale lenders offer the deepest discounts?
There’s really no way to easily determine which short sale lenders offer the deepest discounts. That’s because the major lending institutions service notes for hundreds of investors—each of which establishes its own guidelines for what will be accept in a short sale. Some of these investors may not want to pay closing cost concessions, and others may agree to accept 92¢ on the dollar. Overall, you may be able to ascertain through local data the difference between the list price and the sale price on short sales versus traditional sales, but that establishing the discount rate is not information that is readily available.
Is buying a short sale worth it?
If you understand the risk going in (that the bank may want more than your offer price and that it is going to take a few months to complete), then a short sale may be worth pursuing—especially if you or your client wants that particular property. With inventory low in many parts of the United States, short sale listings are getting just as much traffic and just as many offers as traditional sales. I know an agent that just had 300+ people at his short sale open house this past weekend!
So, if you are looking for a deal on a short sale, here’s the thing: it’s hard to know from the outset whether you will get a deep discount on a short sale, so if that’s what you want, you may be better off filling your cart with bargains at the local 99¢ Only Store.