Done With Short Sales
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I probably look at 100 investment properties per week on a busy week. These days, 90% of the properties I tour are bank owned or REO properties. Every so often one comes up that is a short sale. Initially, I was pretty excited by short sales. Here were properties that were often in better condition, selling at REO pricing, and had less rules for submitting offers than foreclosures.
In the last couple months, though, my attitude and mood toward Short Sales has changed dramatically. Here is why:
- Short sales can take weeks and months to receive any response from the bank regarding the offer.
- During this time, you will get no information about the process or offer.
- Despite the length of time it takes to get a response on a short sale, often the end of the redemption period deadline is looming.
- After weeks and months, another offer can come in at the last minute and be accepted by the bank.
- Banks have been doing foreclosures for decades and have systems and people in place to handle these. It seems like they make it up as they go along when it comes to short sales.
- I have had full price, non-contingent offers turned down because the bank has decided to wait and let the property go into foreclosure.
- Unfortunately, some real estate agents are not trained to do short sales and simply don’t understand all the intricate details of a short sale.
Of the last 5 purchase agreements I have written for short sales, 4 have ended in complete frustration. Knock on wood, but one is going OK to date (but we submitted it 4 weeks ago). Although I will submit any offer, I am advising my customers to avoid short sales at this point.
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Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors with their Property Investment. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.
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May 7th, 2008 at 9:32 am
The last buyer I had put an offer on a home that was a short sale. However, it was not listed on the MLS as being such. We weren’t told until after we submitted the purchase agreement. I consider that “bait and switch” by the listing agent and made it clear to her that I was unhappy with her. Fortunately, the bank accepted another offer on that property and we were left to look for another.
I am not a fan of short sales, but if my client wants to see one I will obey his wishes. However, I make it very clear to him that it could take months and that there will be frustrations.
Now I make it a point to call ahead of time on all of the homes we are going to see to find out if it is a short sale or a foreclosure.
May 7th, 2008 at 10:13 am
Welcome to the dark side.
I still will work with them if the situation warrants. But they are nowhere near the boon everyone seems to want the masses to believe.
May 7th, 2008 at 10:33 pm
I agree with both of you. I won’t stop showing short sales, but I am not going to gloss over the fact that they are very slow and anything can happen.
May 17th, 2008 at 10:57 pm
shorts sales are like winning the lottery, slim odds. Stick with the basics of investing and your ROI will be rewarded. I obviously like oil and gas but there are numerous good places to put your hard earned money.