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Short Sales have been a hot topic among home buyers since mid-2008. Many buyers believe Short Sales represent the best opportunities to get a “deal” on a home here in the Greater Phoenix Metro area. What many buyers don’t know is that Short Sales are much more likely to be a waste of time and effort, in addition to the tremendous risks they pose.
The concept of the Short Sale is sound. The banks agree to forgive the difference between the amount owed and current market value. Unfortunately, it’s the way the banks are managing these sales that make them something a serious buyer should avoid. There are two keys. The first is whether or not the bank is really serious about selling the home. The second is the backwards system the bank is using by NOT giving the listing agent an approved price up front.
Here’s how we explain Short Sales to our clients. Imagine you are in a grocery store and you see your favorite cereal with a price sticker that says “$1.00.” “Oh yea,” you say as you put the cereal box in your cart. When you get to the cashier she says “that cereal is not $1.00.” “But it says $1.00 right on the box,” you protest. “Let me explain,” says the cashier. “I’m the cashier and I have final approval on the price. We hire stocking clerks to put the cereal on the shelf, and they can put whatever price they want to on the box to get you to put it in your cart. But when you get to me, I have final approval!”
“Ok, I surrender,” you say. “How much is the cereal?” “Come back in four to six months and I’ll tell you,” replies the cashier. “And even then I might not sell the cereal. I might send it back to the warehouse or simply sell it to someone else.”
This is a crazy scenario, we know. No one would buy groceries, or cars, or appliances, or anything at all that way. And yet this is the way the Short Sale properties are sold. So if you really want to buy a home, skip the Short Sales and look for a “clean listing” or a foreclosure. At least you’ll know where you stand after making an offer and your chances of closing are astronomically higher than with a Short Sale.