Think Buying a Foreclosure or Short Sale is a Good Deal?

Many people view a foreclosure or a short sale as a great potential investment opportunity.  This may be true, but make sure you know what you are getting into before you make that offer.

People often don’t realize that the mortgage holder calls all of the shots in these transactions.  You are not negotiating with the owner, but rather with the lender and they often have their own time frames.  As a result, what would normally be a 30 -45 day transaction can turn into a 9 month waiting game with no definite outcome.

So why does it take so long?  What we have seen as real estate professionals is that the banks are understaffed and in some cases overwhelmed by the sheer number of properties that they have to deal with.  Sometimes it is even difficult for the owner or listing agent to locate the right person within the institution to contact.  All this combined with the fact that lending standards have tightened up, the banks are really scrutinizing with whom they would be willing to enter a transaction.

One other factor to consider is the bank will most likely not be very willing to negotiate on the price.  They feel that they are already taking a loss and will be doing everything to minimize that.  This includes no negotiating on closing costs and often they will not be willing to pay any realtor commission.

From a cost perspective buying one of these homes may in fact be a great deal, but the reality is that in this market there are other homes that still present great opportunities without all the headaches.  Be sure to know before you go and realize that the buyer’s agent has very little, if any control over these transactions.  Your time is worth money and should be factored in when considering buying one of these homes.

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