Short Sales currently make up about 25% of the total properties for sale in South Florida, although in some communities they represent well over 50% of the properties currently on the market.
A Short Sale is when a property owner wants to sell their home and the market value is less than they owe on it, but they want the bank to agree to accept a "Short Payoff", instead of coming out of pocket for the difference between what they owe and what they can sell it for. Often this amount can be quite significant, running up into the hundreds of thousands of dollars.
Typically, when a property is listed for sale as a Short Sale by a real estate agent, they will come up with an asking price that they feel will encourage someone to make an offer on the property, which they will then present to the bank, along with the seller's financial information, hardship explanations and other documentation, to find out what, if anything, the bank (or banks) will be willing to do. This process is complex and often very long, often taking months to get an answer.
Many Buyers are reluctant to make offers on Short Sales for the following reasons:
- It can take a very long time to get an answer (up to 8 months or longer in the worse cases), especially if there is more than one bank involved.
- The banks are often not aggressive on the price they are willing to accept and may come back with a price higher than the asking price, regardless of what the buyer offered.
- The sellers are frequently not motivated and are uncooperative and difficult to deal with.
- Many of these properties have tenants in them and may be hostile and uncooperative because they have been paying rent and the seller was putting it in their pocket and not paying the mortgage - now they are being forced to leave.
- The property condition can deteriorate over the time it takes to get an approval and close, and in some cases will be vandalized and/or have all of the appliances, fixtures, air conditioners, water heaters, etc. removed - sometimes even stripped bare to the walls with cabinets, etc. removed. Pools are often neglected or abused, landscaping ignored, code violations accumulated and other problems making the property no longer attractive to the buyer by the time an approval is received.
However, in some cases Short Sales do work out and if properly handled with a cooperative seller can become a worthwhile purchase. Searching for "Approved" Short Sales can help avoid many of the above problems and having an Agent experienced with Short Sales help with the process can make a huge difference in the likely outcome.
We have handled many Short Sale transactions over the past 6 years that they have been prolific here in South Florida and will be happy to answer any questions you may have and help you with locating and purchasing any kind of property you are looking for, including Challenging Short Sales.