A Virginia Realtor explains, Short Sales Are “Fake Listings”.
He brings up an excellent point about short sales that I hadn’t thought of. If your home has private mortgage insurance (PMI) then the bank may make more money foreclosing on you and getting the insurance payment than by cutting a deal with you on a short sale.
Ironic ain’t it that that expensive PMI that you’ve been paying all this time only protects the bank from loss and may in fact make your bank less willing to cooperate with you on a short sale.
Here is my take on short sales taken from my email outbox.
This home is a possible short sale which means the price may be b.s., the seller put in a price but the bank hasn’t agreed to it.
… “short sales” often have bogus prices. A short sale is were the seller owes more to the bank than what the home is worth. The bank has to approve the sale price of course since they will receive less than they are owed. The seller will sometimes put a crazy low price on the home to generate interest knowing full well that the bank will never accept such a low price. The seller isn’t going to make any money so he doesn’t care what it sells for.
I suggest that you avoid short sales. However, bank owned (previously foreclosed) property can be a good way to go.
The home you mentioned below, MLS#2772975, is a short sale. In many short sales the list price is bogus because the bank will never approve such a low price. It’s just a way to generate interest in the home.
Only 4 homes that meet your criteria are for sale right now and 2 of them are short sales so their prices may be B.S. prices that the banks will never approve.
Avoid homes that say “short sale” their prices are often not real. Completely avoid any that say auction. Bank owned homes can be a good value although they often need TLC since the people getting foreclosed on may have trashed the place.
I think you get the idea that I believe short sales are a huge waste of time for both you and me.
Am I wrong? Talk me out of it. Leave a comment.
(Hat tip to Dru Bloomfield.)