What You Should Know About Short Sales In Boulder, Colorado
Many who are new to the home buying and selling process, have similar questions and a couple that we hear all the time are “What is a Short Sale?” and “How do I get one?”. After the last couple of years, the terms short sale, foreclosure, bank owned property, and REO are all part of the dialogue we hear on an everyday basis regarding the housing market but there are still plenty of misconceptions about these terms.
Today, we get down to the bottom of one of these terms, one that is still prevalent all over Boulder County- the Short Sale.
First and foremost, let’s define the term. A short sale happens when a home or property sells for less than the balance owed on it’s mortgage. It can be a home, an apartment building, a commercial space or land. There are a couple of things that all short sales have. They all have a seller with hardships, a property that is currently valued less than what is owed on it (we say the seller is “under water” or “upside down on their mortgage”) and a willing bank.
What happens is the seller’s original lender allows them to sell the property for less than it is worth and agrees to take a loss on the home. The bank knows the seller is behind or struggling to make payments or has to move for one reason or another. The bank will agree to a short sale to avoid foreclosure and their own repossession of the property.
Ok, so now we know what one is. But is a short sale a good deal?
There are certainly some pro’s and con’s to short sales. Sometimes short sales can seem like great deals. The price is usually somewhat below what other homes are selling for in the area and if there is one thing I know it is that people love a good deal. But before buyers jump in, they should know a couple key things.
First, banks play an integral role in the selling process and must approve the sales price. The sales price is set by the homeowner and their agent and may or may not be a price that the bank will approve. The bank is going to lose money on the deal and is only willing to lose so much. So while the listing price for the home may seem fantastic the bank will have to approve the final sales price and that doesn’t always happen.
Secondly, the banks are very busy. The sale of your potential home is one in hundreds for them and sometimes the short sale process can take months longer than if you were to buy a normally listed home. If you need to get a home now, the short sale is not for you.
Third, sometimes the homes seem like great deals but often that is because the condition is not in great shape. Remember, most of the time the seller was having hard time paying their mortgage so they were not likely maintaining the home very well. Many times short sales take a lot of work and are sold as-is, meaning any items you find on your inspection (roof needs replacing, cracks in the foundation, bad furnace etc.) will not be addressed. You can take it or leave it.
For some buyers (the handy type with no pressing time frame), the short sale can be a great option. Just bring a healthy dose of patience and perseverance to the table.
This blog really just scrapes the surface of the all that should be taken into consideration in a short sale purchase.
For further reading…..
On buying a short sale:
If you think you may need to sell your home as a short sale:
To search for short sales in Boulder County: