Short Sales vs. Foreclosures

Home Buyer Advice: 'Forget Short Sales'

Buying foreclosures isn't always easy, but it isn't as hard as buying a short sale. A foreclosed home is already owned by the bank. With the short sales only about half of them ever get to the closing. Some end up in foreclosure long before they close even though they have offers on them. With the short sales I would rather not even show the properties to buyers; in fact, in most cases I say "no."

That might seem unfair to the sellers but most of my buyers can't wait 90 days for an answer and they end up withdrawing their offer and we go house hunting again. I have represented sellers on short sales, too, and I won't do it again. There are short sale experts around and I am happy to give them the business. They have teams of people and usually have one person who does nothing but negotiate with the bank. It is a full time job.

--Teresa Boardman, "Short Sales and other lies," St. Paul Real Estate Blog

Nice summary by Ms. Boardman. The only thing I'd change is the success rate with short sales: I'd peg it at closer to one-third, vs. 50%.

I have a client who made an offer on a short sale in November . . . and is still waiting to hear back.

The only things that have happened in the interim are: 1) so much time has elapsed, the banks now need updated financial info from the Seller; and 2) the owner cancelled and re-listed -- at the same price.

Yet one more instance of one of my favorite anecdotes lately: Ben & Jerry (of ice cream fame) met in gym class, where the phy ed teacher told them the assignment was to run a mile in less than 12 minutes. The teacher warned that "if they didn't finish in less than 12 minutes the first time, they'd have to keep running it again until they did."

If you didn't sell your house last Fall, when the market was stronger, good luck getting the same price today!