ILYCE GLINK | Moneywatch | CBS News |
“Throughout the housing crisis, short sales have generally been praised as a good deal for everyone: distressed homeowners get a chance to avoid foreclosure, banks recoup more money from the sale and buyers get a great deal.
But it’s not all roses. In fact, in some areas buyers are avoiding short sales like the plague.
Some agents and brokers have even started advertising homes as “not a short sale” as a way to attract more buyers. And it’s working, according to a study out of Boca Raton, Fla., which found that short sales sell for less, stay on the market longer and are less likely to close at all.
The findings seem at odds with the reputation of the short sale as a win-win-win for everyone involved. Buyers should, in theory, be excited about the idea: they get a home that’s still in good condition at a steep, foreclosure-like discount.
But that excitement is extinguished by the realities of cutthroat bidding wars, heavy-handed bank stipulations and a seemingly endless waiting period to close.
“‘Short sale’ does have a stigma now,” said Summer Greene, regional manager of the Fort Lauderdale-based Better Homes and Gardens Florida First Real Estate. “I can’t think of any buyer that a short sale is good for and it’s poison for a first-time home buyer.”
She counsels her agents to discourage buyers from even looking at short sales, because getting the bank to approve a sale is so difficult. Typically it takes four to six months or more to work through the process, which feels more like eons in markets where prices are leaping upward every month.”