Short sales and foreclosed properties can range in value from poor quality to luxury. What all these properties have in common is that the money owed on them is more that the fair market value.
Buyers assume that these distressed properties are the best to buy because you can get them at rock bottom prices. However with the time and effort to successfully negotiate and navigate to the closing table, buyers may want to reconsider that strategy.
1. Overleveraged properties are owned by someone who is fighting tooth and nail for every dollar when negotiating…and this is not the best scenario for a buyer looking for the best value. Also, many times there are second and third liens on these properties and the seller needs the approval of all these creditors before moving forward in a sale.
2. The condition of these properties is generally not maintained in the same way as a seller who has the additional assets to invest in their homes. Many times these properties have fallen into a state of disrepair and there is substantial money needed to get it into habitable shape. In our area, the buyer would have to pay for an inspection to realize the cost of defects that are not visible to the eye. Appraisal and attorney fees may be incurred before making a decision to walk away as well. This could amount to thousands of dollars.
3. Time is involved for the banks (understaffed and ineffective) to get back to the buyer. Both negotiation and bank acceptance may take a very long time when a buyer is on a time line. This is especially true if the buyer has sold the property they are currently living in and want to close on a specific date.
As I write this today on June 13th, 2009, there are 158 homes for sale in the Byram Hills School District. With that kind of unprecedented inventory, the buyer might be smarter to educate themselves about properties that are not distressed. In many cases, sellers have listened to the market and have either priced their homes to sell or significantly reduced their original listing price. They have their own personal reasons for moving on and decided to be aggressive in the sale of their home. It’s also a great opportunity to have the selection to pick the property that suits your needs.
I have recently seen properties hit the market correctly priced to sell and receive multiple offers with a contract getting negotiated rather quickly. Although buyers are sometimes fearful of multiple offers in this environment, multiple offers are often a signal that the property will be a good investment in any real estate market as it has the qualities that most buyers want…flat land, layout, nice renovations, etc.
Talk to your realtor and take your time to educate yourself in the markets where you are looking to buy. Your realtor should be experienced in these distressed properties and can guide you through the process. The current real estate market requires more professional expertise than ever. For more real estate advice and news, visit www.armonkhomepage.com sponsored by Harriet Libov, a local real estate expert at Houlihan Lawrence.