Short Sales: A Home Buyer Opportunity in Northern Virginia?

The Beltway LifeThis week I posted short sale listings for a number of localities in Northern Virginia and during the process I was intrigued by what I was finding. I made the statement yesterday, and expanded on that same statement in the video above: Short Sales could possibly present a great buying opportunity for the right buyers.

WHO
Mostly I am thinking of first time buyers here, ideally ones that are in a month to month rental situation and have that flexibility to wait for bank approval, but also the flexibility to jump once the approval comes through.

Move up buyers would have a more difficult time capitalizing on the short sale market unless for some reason they would not need to include a sale of home contingency on the contract. Once that contingency is included you would be hard pressed to find a seller who is willing to accept that offer. Beyond that you would also need to be fairly certain that your own property would sell quickly, and that you are willing to list at the right price to make that happen.

WHY
My thought stems from a basic supply and demand argument. Regardless of what is happening in the rest of the market, the Short Sale market sort of stands alone and merits its own equation. Now there is some sluggishness to the overall market, but the short sale inventory is not moving quickly at all. What is happening right now is we have listings in nearly all pricing brackets, from under $90k to over $2.9m, but we lack buyers who are willing and/or able to pursue them. Short Sales have a stigma, well earned over the last couple years, of taking forever to get closed and as mentioned above, they are tough for current home owners to go after. That said, supply and demand is not the only factor here.

Increasingly short sale homes are coming on in higher price brackets, and with good pride of ownership. The other stigma with short sales besides the long wait is that they come in unkempt condition. This is still true in many cases, but not all. More and more we have folks who have just been caught in the tide, they are working hard to stay in their homes, but something has to give. Rather than just walking away they are trying to take the responsible route and sell their home as a short sale, and they are doing many of the normal preparations to list and market the property. These homes can often be move in ready with no updates necessary, and therein lies the opportunity. A part of the equation for the bank to approve a short sale contract is number of showings on the property and number of other offers. If you are out there with the only offer on the table your chances of getting a good deal on the home go up quite a bit.

A SHORT SALE IS NOT
Please take notice that I said “good deal” and not “a steal”. The banks will have a distinct loss analysis for each property and though they will typically prefer to avoid taking the home into foreclosure they are not going to give the property away either. Offers will need to stay reasonable, but if you can spend $15 – $25k less for a short sale home than you would for a regular sale in similar condition is that not a good deal?

SOME CATCHES
If you are interested in pursing a short sale there are certainly things we should discuss to make sure that you know what you are getting into. For starters, short sale listings are sold “As-Is”, which means you have no negotiating power with the inspection. What you see is what you get, and what you don’t see is what you get as well.

I need to run, but feel free to comment, or contact me directly to discuss further.

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  • yeah,I just thought you might want to know that your blog is messed up when you view it on my iphone. I?m not sure if it has something to do with my phone?s browser or your website? just saying…

    • ColinStorm

      Thanks for the tip! The site is not optimized for mobile, so that may be an issue. However, just last night an issued kicked in where video was trying to overtake images in the post intro’s. I have a temporary fix for this up now.

      Colin