Several years ago, you saw it on the news: people nationwide, losing their jobs and, shortly thereafter, their homes. No one expected the pandemic to spread to our mid-sized city, with its solid industries. After all, we work at Humana, UPS and Ford. What could possibly go wrong?
2007 showed us just how wrong it could go. Now our own Multiple Listing System is reporting that one out of every five real estate transactions in the Metro area involves at least one distressed property. Short sales and bank-owned properties are now woven into the tapestry of our market.
But not every distressed property is doomed for foreclosure. Processes have been developed, streamlined and improved over the last three years to divert the devastation of foreclosure. One of these processes is the short sale, so named because the bank is agreeing to sell the house for less than what is owed on it. In other words, they’re taking a short fall on the house to avoid the cost of foreclosing on a home, which is very expensive.
There are many benefits to the seller in a short sale scenario as well. If you choose this route, your lender will pay all your closing costs and realtor fees, in addition to covering the mortgage deficit. Also, you can repair your credit in as little as three years – less than half the time it takes to recover from a foreclosure. You may also be eligible for HAFA funding, which will help cover legal fees and moving expenses. However, be prepared – short sales can take up to three times longer to complete than regular sales!
Buyers can also benefit from purchasing a short sale, since they’re likely to get a great home at a much lower price than they would with a standard sale. But if you are purchasing a short sale, make sure to get your home inspection, because most people who are selling distressed homes can’t afford to do a lot of repairs or maintenance. Offers made on distressed properties do require lender approval before they can be considered accepted contracts, so buyers should be ready for a long wait when purchasing a short sale. However, if you can navigate these small speed bumps, you could find yourself at the closing table getting a whole lot of house for your money!
Tonight, we will sit on our couches and hear about distressed properties. These homes are part of the fabric of our community now, but if the proper avenues are pursued, everyone involved with the purchase or sale of a distressed property can win.