Is Buying a Short Sale Right For Your Client?

With short sales making up a significant part of inventory today, your buyers will no doubt run across short sale homes that they're interested in. There are bargains to be had, however short sales do differ in a number of ways from conventional home sales. Here are a few things to let your clients know if they're thinking about buying a short sale property.

Short sale homes sell for less, but not significantly less than market value.
Buyers hoping to snap up a home for half the market value will be disappointed. The selling price for short sales average about 10 percent less than for non-distressed properties. The bank is looking to recover as much of the value of the home as possible, so they will not accept offers that are significantly under market value. That said, with savings that can equal tens of thousands of dollars, a short sale is a great way for a buyer to get more house for their money.

Short sale properties are sold "as is".
The lender will not be making repairs to the home. Any improvements that need to be made are most likely going to be the responsibility of the buyer. It's a smart move for you to get contractor bids for any necessary repairs and use those to help negotiate a lower sales price.

A short sale will take longer than a conventional home sale.
Once your client and the seller have mutual acceptance on an offer, you need to allow 60 to 90 days for the lender approval process. There are often long stretches when the offer is slowly winding its way through the bank's system, so buyers need to be patient.

If your buyer has to sell you’re their home first, a short sale is probably not the best fit.
Lenders generally will not take contingent offers on a short sale.

The bottom line: As long as your buyer can be patient, and you're working with a listing broker who understands the process, buying a short sale is a great way for your client to purchase the house they want at a great price.