Even in a weak housing market, bargains can still be found. Many real estate investors and savvy home shoppers have been looking to foreclosures for good buys below market value. Although foreclosures often can be bought at a steep discount, the short sale market also provides opportunities to save thousands on a home purchase while offering several benefits over buying a foreclosed property.
During the third quarter of 2011, foreclosure homes sold for a third less than the average price of non-distressed homes, according to a RealtyTrak report. In comparison, pre-foreclosure homes – those purchased through a short sale – sold for 24 percent less than the average sales price of a home not in foreclosure. Although the discount is not as steep on short sale homes, the savings is still significant, and a short sale generally involves less risk.
Unlike foreclosed properties, which are vacant, a house offered in a short sale is still occupied. That means the homeowner is still maintaining the house, and the property is less susceptible to theft or vandalism. What’s more, because the house is occupied, you can get a seller’s disclosure, which will provide information and history about the house, so you know what you’re buying. Often, you also can ask questions of the owner – either directly or through your real estate agent – to get more insight on specific issues (e.g., the age of the air conditioning unit or water heater, whether the roof has had any repairs, etc.). In contrast, a foreclosure may have a slightly deeper price discount (33 percent vs. 24 percent), but you don’t get a seller’s disclosure, don’t have anyone to ask questions to, and don’t know as much about what you’re getting. You might get the house at a bargain, but you’re buying a lot of risk. Although you can have an inspection done on a foreclosed property, an inspector will never know the house as well as the owner.
The recent RealtyTrak report indicates that more and more homebuyers are recognizing that short sales are the best buy on the market. Year-over-year numbers for short sales increased sharply in several states, including Michigan (up 68 percent), North Carolina (up 44 percent), Ohio (up 43 percent) and Georgia (up 35 percent). Oyezz Real Estate specializes in managing short sales for buyers and sellers. If you are interested in looking for a short sale property, please call our office, and one of our associates will be happy to serve you.