Think all the housing bargains are long gone? Home buyers are still finding great deals in the form of short sales. Short sales — homes sold at a price below the combined total of all of the outstanding mortgages on a property — account for about 10% of all home sales this year, up from about 8% a year ago. The increase in short sale transactions signals that banks are working hard to get these properties sold, and more quickly.
More good news: Many banks are still selling many short sales at bargain prices. While the median U.S. house price is about $170,000, the median price of a distressed home is $120,000. When it comes to distressed properties, short sales have some advantages for buyers. For starters, short sales tend to be in better shape than foreclosures. There also may be fewer unknowns with a short sale, as home sellers may still be living in the home.
The biggest downside of a short sale remains the time and hassle involved in buying one. It wasn’t unusual years ago for a short sale to take up to a year (or even more!) to actually close. Many buyers, not wanting to wait months and months to find out if their offer was accepted, walked away and instead purchased other types of homes that were able to be bought within a reasonable time frame. Buying a short sale still can take longer than a non-short sale home purchase. Over the past year, however, banks have been speeding up the short sale process and making this type of distressed property less of an overall hassle to buyers.
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