Buyer Myth #1: The Short Sale Market is Teeming with Incredible Values and Even Downright ‘Steals’.

It is true that you can find some good deals with short sale properties. Unfortunately, most buyers go into their home search thinking that they will save 10 to 20 percent, and even more when they purchase a short sale property. On average, most short sales will close at about 3-7 percent off the full market value.

The important thing to remember is just how savvy banks are. They are not going to approve a short sale if it’s not going to net a decent return for them. They are losing money no matter what, so they are going to try to lose as little money as possible. They know market values better than anyone and will set the price based on what they feel will be just low enough to sell, but will be closest to full market value.

So what does this mean to buyers? It means you can save a little money buying a short sale property, but that you should not always expect to find a ‘steal’. Also, be sure to factor in any renovation costs that may be associated with the property. Most short sale properties are truly sold as-is; rarely is there wiggle-room in negotiations for concessions or repairs.

Because the seller is largely removed from the process, you will not easily be able to negotiate with the bank to make necessary fix-ups; replacing carpet, paint, etc. If you know the property needs a lot of work, make sure to do a thorough evaluation of all the costs associated with renovating the property before you make your offer. Determine whether the reduction in selling price is worth what it will take to make the property livable for you.

A short sale transaction can be a long, laborious and time-consuming process, and it can sometimes fall through completely during different parts of the process. As a buyer, it’s important not to get completely wrapped up in one short sale transaction while watching other opportunities pass you buy. Work with your agent to leave yourself outs in the offer process, just in case you decide to pursue something else.

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