Scottsdale Condo Mania
Scottsdale Buyers Guide > Buying a Short Sale Condo -- Is it worth the Trouble?
If you haven’t bought real estate for a while, you’ll be surprised (and not pleasantly so) that things have changed quite a bit from past years, especially in the hard-hit Phoenix and Scottsdale market. As a buyer, you’ll be looking at condos owned by banks, and that strange new territory – short sales.
Most people are vaguely familiar with the term “short sale” from the media attention it has received in the past year. In case you aren’t sure what the term means, here is a simple explanation: If an owner owes more on a home than he can sell it for, the owner can, with bank approval, sell the property for less than the mortgage amount, and have the difference forgiven. For example, an owner owes $150,000 on his home. He can sell it for $100,000. If the bank approves a short sale, the owner can sell it for $100,000 and the $50,000 difference would be forgiven.
There are several reasons an owner may consider this path instead of a foreclosure, but for now we want to focus on the buyer’s perspective. Here are some differences in what to expect when submitting a contract on a short sale:
It takes longer to close. Though the contract you submit is between you and the seller, bank approval is a seller contingency. That means that if the seller doesn’t get bank approval for the short sale, you don’t have a deal. And this approval may take from 2-4 months. So, be prepared to submit a contract and wait.
It may not close. Lenders are playing hardball with sellers now, and asking for promissory notes. This puts sellers on the hook for some debt after the sale, which might not be in the seller’s best interest. If the seller does not agree, then poof, the deal is gone.
The property is sold as-is. Lenders often do not want to see the seller contribute much in the way of cash to fix a significant problem found during escrow, so don’t assume that problems your inspector finds will be remedied by the seller.
So given these major negatives, why would you want to put an offer on a short sale condo? In some cases, you won’t want to go through the hassle and uncertainty. But in some cases where the condo is clearly in the best location, has the best price and is well-kept inside, you may determine that yes, it’s worth the trouble, worth the wait and worth the uncertainty. Even in the condo world, not all properties are equal.
We have worked with many short sale transactions, many which do go through and have resulted in a happy buyer. We can help determine the probability of a successful transaction based on the lender, and the type of loan the seller has.
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ARMLS Logo indicates a property listed by a real estate brokerage other than Contigo Realty. All information should be verified by the recipient and none is guaranteed as accurate by ARMLS. Based on information from the Arizona Regional Multiple Listing Service. Copyright © 2011. Arizona Regional Multiple Listing Service, Inc. All rights reserved.
Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.
Last Updated: 2013-06-19
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