So you think you want a foreclosure or short Sale because it's a "great deal"... Buyers are justifiably interested in the savings a short sale can offer.

One of the most common questions asked of real estate professionals these days is some variation of the following:

"Is now a good time to buy a foreclosure?" 

I get this question routinely, too, and my short answer is simply to "check with your local real estate agent." I say that because the most accurate answer to the question is based on local market conditions and the individual financial status of the prospective buyers -- two pieces of information best determined by a good local real estate agent.

Unfortunately, some agents are still steering their clients away from foreclosures simply because those agents don't understand how foreclosures work.  The free-market tends to swing to extremes before settling back into a reasonable rhythm.

What we saw over the past few years in many parts of the country was a real estate market ratcheted up to an unsustainable rate.  Homes were far overvalued and overpriced. Builders scrambled to meet future supply based on demand artificially inflated by speculative buyers who relied on risky loans. Lenders' risk analyses were in some cases clouded by seemingly insatiable demand from investors in the secondary mortgage market.

Now, the market has moved back to the other end of the spectrum and everything is slowing to a snail's pace: Home prices in many areas are plummeting, builders are inactive, and many prospective buyers and investors are sitting on the sidelines and waiting as the inventory of homes for sale balloons.  That makes the market all the more attractive to fiscally sound buyers and investors.

Foreclosures typically represent the most motivated sellers, which can be a good thing for buyers ... but buying a foreclosure can be one of the most complicated real estate transactions a buyer can make.However, few buyers are prepared for the process, often because it is new terrain for many agents as well.  I would not recommend getting into this any realtor.  First off...not every short sale is a "deal".  

Our Realtors have been trained in short sale transactions and can let you know if a short sale is right for you based on neighborhood values, condition of the home, and the stress level you can handle.

1. You must be patient.
   
   Occasionally, a short sale clicks and the thing is done almost as quickly as a regular sale. Those are the exception and not the rule. Typically, and it all depends on the lender, short sales can take 60 – 90 days.
   
   
2. You are buying the house AS IS.
   
   Just like with a bank-owned foreclosure, it is "an as" is transaction, because no principal has the funds to remedy any physical issue with the house. Get an inspection for sure, but understand the lender won't address anything and the seller cannot financially.
   
   
3. You WILL get clear title.
   
   In an approved short sale, none of the seller's back taxes, arrearage or other issues convey to you. The lender is releasing all liens. That is why you want to close the deal through a title company.
   
   
4. You probably can't "steal" the house.
   
   As a matter of fact, your offer may not even be submitted unless it is your best offer. You might get a $250,000 house for $190,000, but you won't get it for $150,000. Short sales are good deals, but they are seldom steals. Which brings us to this point:
   
   
5. Once approved, you have a deadline to close. 
   
   
   Typically, it is only 21-30 days to close or the offer is rescinded. Therefore, you should have your act together with regard to your appraisal, rate lock, inspections, and so forth. When that approval comes down the pike, you need to be prepared to pull the trigger.