As you know, a short sale home is one where the homeowner owes more than the current market value. In other words, the homeowner most likely paid top dollar for the home during the boom years and now the home has depreciated significantly. In order for the homeowner or seller now to put the home on the market, they must gain approval or permission from their mortgage company to sell the home for less than what they paid for it.
The time frame it has taken most mortgage companies and banks to approve a short sale request has left a “bad taste” with buyers, sellers, real estate agents and anyone else directly involved in the transfer of real property. In the past, this time frame usually took 4 to 6 months to approve a buyer’s offer on a home.
With such a delay in the approval process many buyers and their real estate agents have tried to stay away from making offers on these homes. This unconventional delay has caused duress for the buyers and sellers involved. It has also been one of the reasons foreclosures have been on the rise.
The government recently passed a new Federal Law giving the bank only 10 days to approve an offer from a buyer on these short sales. It has not happened yet, but there are some encouraging signs as banks are making more of an effort to adhere to the new law. Short sale requests in some cases are getting approval in less than 2 months. This is a great sign but nowhere near the time frame it should take to approve an offer from the buyer.
A bank owned home is synonymous with a foreclosure. Although this type of home requires approval, it is dealt with directly as the bank already owns the home. These types of distressed properties usually get approval within a few days.
The time of acceptance for a bank owned home or foreclosure as compared to a short sale is still the difference between night and day. However, it is placing more urgency on the short sale banks to expedite their approval process.
As more and more bank owned homes come on the market, the short-sale home process becomes more competitive. One of the drawbacks to a bank owned home or foreclosure is they are receiving multiple offers as soon as they come on the market. This sounds strangely familiar to the 2004-2005 eras. Most buyers do not like bidding against each other, but the bright side is that the buyer will know within a few days whether their offer was accepted or not. If it is not accepted, they have lost little time and can move toward finding another home.
If a buyer finds a short sale home that meets their needs, never hesitate to make an offer. The buyer should continue looking at homes in the meantime. If they find a bank owned home or foreclosure but have not received approval from the short sale, they should ask their real estate professional how to pursue the bank owned home.
For more information on short sale homes, bank owned homes and foreclosures in the Phoenix Real Estate or Tucson Real Estate markets, please visit Real Estate Homes, LLC where you can search for all current homes for sale.
