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3 short sales on one street...
H and I are in week 3 of our house hunt! We found a development that we like, right near the elementary school that we LOVE! The only problem (?) is that of the 4 homes for sale, 3 -- all on the same stree-- are short sales.
They are listed between $270,000-$290,000. The only traditional sale in the neighborhood is signifigantly more expensive -- $369,000.
All 4 houses are pretty much the same in terms of floor plan.
We plan to ask our realtor about this once we see them tonight, but I wonder what kind of a deal we will be able to get if we bid first vs. waiting for someone else to buy first and giving us a good comp (the last comps are from when the houses were sold new in 2007 for over $125,000 more than the current asking).
Any suggestions or experience with this? It seems like a lot of short sales in such a small area...
Re: 3 short sales on one street...
The short sales will be essentially bank-owned and your dealings will be with a bank and not with the actually seller as much, so you won't really have any wiggle room to negotiate on them with repairs/inspection issues (consider them sold as-is). In addition, short sales can take MONTHS to process and close. I think some posters here have seen them take up to 6 months.
All the short sales mean that the current residents spent more than they could really afford and/or they had significant life changes that prevented them from keeping up on their payments.
When these homes DO sell, they will lower the home values in the neighborhood overall, which means that buying the home listed for $369k might not be a great idea since its value will fall once the SSs sell. Potentially, you could be upside down on that home's mortgage within a year or two if its value falls beneath what you owe on it. Rigth now it is the Cadillac of the neighborhood.
A few things for your consideration:
1. The list price on a short sale is absolutely meaningless. That's just a number that the realtor slapped on to the listing, and is not a reflection of what the bank believes that the house is worth and will thus expect as a purchase price. So feel free to offer below asking price because it really doesn't matter. Just get it under contract.
2. If you are interested in offering on one of the SSs, have your realtor pull sold comps in the area. That is what the SS bank's appraiser will look at when determining what the bank should demand during negotiations. This number can end up being significantly different from the price on your contract (for better or for worse).
3. Don't try to wait for another one of the SSs to close before making your own deal. Closing on a SS will take at least 3 months. Do you really want to wait 3 months before even making an offer and beginning your own waiting process?
What are those houses appriasing for? If they are appraised significantly higher more like the neighbor who is not a short sale, it maybe a good deal, you already have equity in the house.