Are Short Sales & Foreclosures Really Smart To Buy?

Those who are currently underwater on their mortgages and who have lost their homes over the last couple have years have been a rough ride. However, for those searching for homes to buy today, short sales and foreclosures can present great deals.

Short sales are homes which are being sold for less than the amount that was previously loaned on them. They help underwater homeowners get out from under the debt and prevent further damage to their credit (avoiding foreclosure) while helping the lenders to minimize their own losses from further legal fees and holding costs. Although the majority of short sales has drastically declined since 2010, there are still short sales available on the market now, being offered for as little as 30-50% of what they were purchased for.

There are a number of types of foreclosures including those available at court auction, HUD homes and banked owned REOs. All of which offer significant discounts. How large the discounts are on these homes often depends on which stage you buy them in and what condition they are in. Though you easily ought to find a range of great choices available from 40-70% of their after-repair-value. Even if you are not buying specifically as an investment it is clear that even if it takes another 5-8 years for properties to return to their previous lofty highs there is a lot of equity to be had and buying now could easily be the best investment of your life.

It is true that both short sale and foreclosure properties can require a little more paperwork and time to close than conventional sales. However you will be hard pressed to find much else on the market these days. Those who owe nothing on their homes are mostly holding out for the market to rebound to it’s recent peaks. Just keep in mind it may take a little longer to close and that it is more important than ever to have a professional on your side representing your best interests. Of course you can try to negotiate and deal with banks and mortgage lenders yourself, though this can often be a lesson in futility. It is much wiser to work with someone who knows exactly how the ‘i’s need to be dotted and the ‘t’s crossed to save months of wasted time.

The bottom line is that none of us will likely see such great opportunities for investment or to acquire a home a such affordable rates.