PROS
There is one huge pro - you are sometimes going to get a property below even current market value. Might be up to 10+% below current market value so there is the potential to get a great deal. Sadly, in this world you never get something for nothing. There are downsides for this 'smoking ' deal
CONS
Short Sale (1) While you are still coping with the delinquent property owner, the contract must be authorized and signed off on by the bank taking the loss. In a number of cases, the bank doesn't even know that a short sale is being tried until they receive an offer. This indicates that the wait time when submitting an offer on a short sale could stretch from days to weeks to even MONTHS to get a reply. Not just that, but until the bank has accepted/counter the offer, the listing agent will leave the home showing as ACTIVE on the market and in the MLS soliciting other offers and will submit all received offers to the bank for approval.
The bank can only pick one, of course. So you might be waiting for months and then get turned down and hear the bank accepted an offer submitted weeks or months after your offer. This may be terribly annoying, to say the least! (2) Due to how the bank processes offers and the assertive pricing of these properties, it is not uncommon for well-priced short sales to sell for the full listed price Or Even More because of a bidding war between suitors. (3) Banks need to avoid responsibility and will demand the buyer submit offers with an AS-IS annexation basically stating the customer assumes all risk linked with the disposition of the property from the time of the offer acceptance. Buyers will have the privilege to check the property, but if you miss something, the buyer - not seller - is responsible. This is one of the reasons these properties are discounted - to account for the buyer's risk.
REOs (1) AS-IS annexation. Same as indicated but even scarier. Once the bank has taken over, many times they shut off the resources to cut back their costs. This makes it much tougher to inspect the property correctly - HVAC, electrical, plumbing systems. (2) Remember, in this eventuality, the bank has forcefully taken ownership and possession of the home before trying to sell it. This indicates that the defaulting party was probably very upset before leaving the home. It is becoming more common to hear stories of how angry house owners damaged/wiped out property in the home, removed appliances, plumbing fixings, drawers light fixtures/ceiling fans and/or other home fixtures.
I have even seen property with major water damage, drywall damage and heard of stories of folk throwing cement into the drains to cause future owners headaches. It is Exceedingly Important TO HAVE Through INSPECTIONS OF These Kinds Of HOMES. (3) Banks can take long periods to reply to offers, although response times are typically faster than on short sales as the bank has already done the legwork up front to determine price and what they would be content to accept.
There is one huge pro - you are sometimes going to get a property below even current market value. Might be up to 10+% below current market value so there is the potential to get a great deal. Sadly, in this world you never get something for nothing. There are downsides for this 'smoking ' deal
CONS
Short Sale (1) While you are still coping with the delinquent property owner, the contract must be authorized and signed off on by the bank taking the loss. In a number of cases, the bank doesn't even know that a short sale is being tried until they receive an offer. This indicates that the wait time when submitting an offer on a short sale could stretch from days to weeks to even MONTHS to get a reply. Not just that, but until the bank has accepted/counter the offer, the listing agent will leave the home showing as ACTIVE on the market and in the MLS soliciting other offers and will submit all received offers to the bank for approval.
The bank can only pick one, of course. So you might be waiting for months and then get turned down and hear the bank accepted an offer submitted weeks or months after your offer. This may be terribly annoying, to say the least! (2) Due to how the bank processes offers and the assertive pricing of these properties, it is not uncommon for well-priced short sales to sell for the full listed price Or Even More because of a bidding war between suitors. (3) Banks need to avoid responsibility and will demand the buyer submit offers with an AS-IS annexation basically stating the customer assumes all risk linked with the disposition of the property from the time of the offer acceptance. Buyers will have the privilege to check the property, but if you miss something, the buyer - not seller - is responsible. This is one of the reasons these properties are discounted - to account for the buyer's risk.
REOs (1) AS-IS annexation. Same as indicated but even scarier. Once the bank has taken over, many times they shut off the resources to cut back their costs. This makes it much tougher to inspect the property correctly - HVAC, electrical, plumbing systems. (2) Remember, in this eventuality, the bank has forcefully taken ownership and possession of the home before trying to sell it. This indicates that the defaulting party was probably very upset before leaving the home. It is becoming more common to hear stories of how angry house owners damaged/wiped out property in the home, removed appliances, plumbing fixings, drawers light fixtures/ceiling fans and/or other home fixtures.
I have even seen property with major water damage, drywall damage and heard of stories of folk throwing cement into the drains to cause future owners headaches. It is Exceedingly Important TO HAVE Through INSPECTIONS OF These Kinds Of HOMES. (3) Banks can take long periods to reply to offers, although response times are typically faster than on short sales as the bank has already done the legwork up front to determine price and what they would be content to accept.
About the Author:
Phoenix Short Sales Expert makes a speciality of Short Sales in the Phoenix AZ metro areas. Reasons for short sales include nominal credit damage, ability to get a future mortgage, work factors, avoiding foreclosure and low tax debt. We can help you with your Short Sale today!
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