(Originally posted on January 9, 2008)
How to spot real buying opportunities
Here I am, back on my favorite soapbox, short sale listings. I update the number of short sale and foreclosure listings on my website every day, which you can see at http://www.youcanaffordvegas.com/.
Most of the buyers I work with are internet-savvy and come to me after beginning their own search. Invariably, their list of homes to see include short sale and foreclosure listings. I have no problem showing foreclosures. In fact, I'm surprised more and more by how presentable the majority of them are.
Although there is added paperwork and a slight delay in getting an answer from the bank, all in all, the process runs smoothly. Not so with short sales.
It's a fool's game
The last time I quoted statistics for short sales and foreclosure listings in my blog was back on June 30th, 2007. At that time, there were 2,170 short sales. Today, there are 4,237 short sales listed in the Las Vegas MLS. This is sheer lunacy, and I'll tell you why.
A short sale figure has little or no basis in reality. In many cases, the listing agent has never had communication with the lender, and so they simply pick a low number that will attract offers from buyers. From my personal experience, the agent is inundated with offers and those usually get turned down from the lender because they're unreasonable.
Gumming up the system
Lenders are so overwhelmed by the volume of short sales and foreclosures, that the review process has gone from weeks to months. Now many loss mitigation departments will not answer their phones at all, only taking written correspondence. So what does this mean to a potential buyer? Lost time and opportunity. How long do you wait for a response on an offer of your dream home, only to have to start from scratch, letting other "real" homes go to other buyers?
Not fun for the sellers, either
On the other side of the coin, if you're the homeowner and you've listed your house as a short sale, you did this hoping and praying that you can make your way out of the current housing mess unscathed. What's been happening, though, is that there is no communication from the lender, and in turn, you are stuck in financial limbo. Personally, I think that short sales had some viability at the beginning of this cycle, but that window of opportunity has passed.
Look for the real deals
The good news is that many homeowners are becoming more realistic, and setting their prices where they should be. In addition, foreclosures within neighborhoods are good values, and may direct you to a subdivision you wouldn't have considered otherwise. As long as you're buying for the long-term, you should be okay. You can't eat your heart out if you buy and the prices continue to decline a little. The overall difference from what you paid won't matter, if you got the home you wanted.