Could you wait 100 days for $65,000? The recent sales figures for short-sale homes in Carlsbad have buyers securing tremendous discounts on the already depressed housing prices. The average four-bedroom, three-bathroom, 2,769-sq.-ft home in Carlsbad (regular sale) in the past six months sold for $725,000 with an average market time of 43 days.
The same home sold as a short sale closed for $661,000 with an average market time of 142 days. As much as a 10-percent discount awaits the daring homebuyer who traverses the pitfalls of a short-sale purchase. Since Carlsbad is currently experiencing a restricted supply of available homes, it is the prudent buyer who considers the short-sale opportunity.
A short sale occurs when a homeowner owes more than the property is worth. The homeowner is often experiencing some type of hardship and is forced to sell, but does not have the money to settle his debt. The homeowner must prove hardship and negotiate with his lender to accept less than what is owed.
Short sales are the bane of the current real estate market. Many real estate brokers refuse to show their clients a short-sale home. Lender approval is difficult obtain and the chance of success is low. The risk of waiting six months only to be told the lender will not approve the terms is very real. Buyers with strict budget constraints are often heartbroken when they find their dream house is approved at $550,000 and not the listed $500,000.
A successful short-sale buyer will find out how long it will be before the property goes to auction. If the auction is only a few months away there is little time to complete the sale. A short sale can take upwards of 120 days from offer to submission. Should the home go to auction, the escrow will be cancelled. The buyer will be out the time, effort and costs incurred for appraisal and home inspection.
In the past, agents have worked to secure a postponement of the foreclosure auction. It should be noted that banks have become less likely to grant postponements and have chosen instead to foreclose. A postponement occurs when the bank reschedules the auction date, allowing the homeowner to remain in possession of the property until the short sale is completed.
A successful short-sale buyer will gain the support of the selling agent. The agent often has one opportunity to secure the bank's approval. Should the buyer cancel escrow, the bank does not allow the agent to substitute a back-up buyer. The agent must restart the process. The home is then at risk of foreclosure.
The listing agent often has multiple offers on his short-sale listing. He may have to make a judgment call on whom to support through the process. The successful short-sale buyer will have full mortgage approval, a strong deposit and a flexible housing situation should the process take longer than expected.
If you are going to make a low offer, have relevant comparative sales to support your low offer. An experienced real estate professional will help you gather the facts and strategize the appropriate approach given the specific situation.
FHA Update
As of February, FHA buyers can purchase homes that have recently been flipped. According to the US Department of Housing and Urban Development (HUD), the policy change will allow FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales.
HUD previously had a longstanding rule that restricted FHA buyers from purchasing flipped property within 90 days of the previous sale. The rule was in place to protect borrowers from flippers selling homes at inflated prices. But since foreclosures account for a large percentage of the current marketplace, the rule had become unnecessarily restrictive to FHA buyers. The temporary lift will last until 2011.
The same home sold as a short sale closed for $661,000 with an average market time of 142 days. As much as a 10-percent discount awaits the daring homebuyer who traverses the pitfalls of a short-sale purchase. Since Carlsbad is currently experiencing a restricted supply of available homes, it is the prudent buyer who considers the short-sale opportunity.
A short sale occurs when a homeowner owes more than the property is worth. The homeowner is often experiencing some type of hardship and is forced to sell, but does not have the money to settle his debt. The homeowner must prove hardship and negotiate with his lender to accept less than what is owed.
Short sales are the bane of the current real estate market. Many real estate brokers refuse to show their clients a short-sale home. Lender approval is difficult obtain and the chance of success is low. The risk of waiting six months only to be told the lender will not approve the terms is very real. Buyers with strict budget constraints are often heartbroken when they find their dream house is approved at $550,000 and not the listed $500,000.
A successful short-sale buyer will find out how long it will be before the property goes to auction. If the auction is only a few months away there is little time to complete the sale. A short sale can take upwards of 120 days from offer to submission. Should the home go to auction, the escrow will be cancelled. The buyer will be out the time, effort and costs incurred for appraisal and home inspection.
In the past, agents have worked to secure a postponement of the foreclosure auction. It should be noted that banks have become less likely to grant postponements and have chosen instead to foreclose. A postponement occurs when the bank reschedules the auction date, allowing the homeowner to remain in possession of the property until the short sale is completed.
A successful short-sale buyer will gain the support of the selling agent. The agent often has one opportunity to secure the bank's approval. Should the buyer cancel escrow, the bank does not allow the agent to substitute a back-up buyer. The agent must restart the process. The home is then at risk of foreclosure.
The listing agent often has multiple offers on his short-sale listing. He may have to make a judgment call on whom to support through the process. The successful short-sale buyer will have full mortgage approval, a strong deposit and a flexible housing situation should the process take longer than expected.
If you are going to make a low offer, have relevant comparative sales to support your low offer. An experienced real estate professional will help you gather the facts and strategize the appropriate approach given the specific situation.
FHA Update
As of February, FHA buyers can purchase homes that have recently been flipped. According to the US Department of Housing and Urban Development (HUD), the policy change will allow FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales.
HUD previously had a longstanding rule that restricted FHA buyers from purchasing flipped property within 90 days of the previous sale. The rule was in place to protect borrowers from flippers selling homes at inflated prices. But since foreclosures account for a large percentage of the current marketplace, the rule had become unnecessarily restrictive to FHA buyers. The temporary lift will last until 2011.