March Madness!!

No, this isn’t a lead in to a basket ball game; this is the game of Real Estate. The newest buzz word in real estate is “short sale”. I am sure most of you have seen this word on some type of ad, or commercial or even in a newspaper article. So what does it mean? A short sale is when a Seller owes more on their home than the current value of the home on the open market. In lieu of foreclosure they are seeking to get the bank to accept a reduced price to pay off their current loan and sell their home. Now what does this mean to you? Short sales can be an excellent way to get more house for your money. But it is also sort of a game. The game players are the bank, the listing agent and the Buyer. Lately I have noticed a trend of homes with huge price reductions, and then in small print stating that the price reduction is contingent upon approval from the bank for a short sale. What happens in a situation like this is that the price that the Listing Agent has priced the home for is not the amount of which the loan is for, or even an approved price from the bank. This is what the current market value is for the home or maybe even a little below the current value, in hopes of getting a bidding war to ensue. Now you the Buyer make an offer on the home based upon comparable (comps) properties that have sold in the area not based on the asking price. If you are lucky enough to be in the ballpark of what the bank has in mind you will get a counter offer. Now this counter offer could come in two days or two months. The banks process your offer soon after they receive it and send out another realtor to give a Broker’s Price Opinion (BPO) to try and figure the current market price for the home in question. If your offer and the banks bottom line match then, whoohoo, you have an escrow. Basially what it all means is that if you are a well qualified buyer or have cash and a great deal of patience you can get a good home for a great price.