The real news is that short sales are so badly named it should be against the law. If there is any truth in advertising they should be called “Long Hard Haul Sales” which is much more appropriate. The word short sounds like it will take a short time to buy one but that is so far from the truth that they are on different planets.

What short sale means is that the bank will take less than what is owed on the property. “Short” has nothing to do with time frame and less to do with a short amount of pain. The link below discusses some of the changes that are coming down the pike regarding short sales but as a word of caution…don’t be in a hurry to close the deal and move into a short sale.

And if you are selling a short sale you will not be paid by the hour because if they did you would be making below the legal limits of minimum wage. Workers in Bangladesh will feel bad for you and perhaps send money, stuffed animals and kind letters. But they won’t envy you.

Short sales are like Chinese water torture. One drip of hope at a time followed by weeks of silence and buyers that are ready to jump ship every other day. At the end of the process will it be worth it to anyone? Well that depends on who you are and what you expected to begin with. Speaking from as little exposure as I could possibly have with short sales and only listening to coworkers moan and complain as they slow go both broke and insane, I wouldn't put myself through the ordeal or any of my clients.

It is not that I don’t have any patience. It is just that I don’t need to have every experience in the world to know what I don’t want to experience. I don’t want to eat cockroaches dipped in chocolate, I don’t want to jump out of an airplane naked and I don’t want to live through the drama and gnashing of teeth that are associated with short sales.

Webinar on Short Sales

HUD Foreclosures

HUD foreclosures and VA Foreclosures are some of the best homes to buy when price is part of the equation. As with most Americans, price is always a concern. If not buying the same house for less, why not buy more house for the same dollar invested? When looking for a good deal it is hard to do better than the VA or HUD foreclosures market. The simple truth is that there are just more VA and HUD homes on the market, as they represent such a large number of mortgages that are generated each year. This translates into more foreclosures just by the magnitude of difference between all others comparing to the two largest.

The two largest also being government owned and operated means that they have less time to wait to make money back on the home. The FHA is especially known for selling HUD homes for less than the average sales price in a given area. FHA foreclosures represent a fraction of HUD but they are still a significant number of homes and both should be considered.

VA (Veterans Administration) and HUD (Housing and Urban Development) have different and unique opportunities for the buyer. Both are often forgiven for the local taxes normally associated with the purchase of a home (this is on a county by county basis). Be sure to ask the local title company or escrow company to look into it for you before closing as this is often missed due to their are not used to dealing with the 2 to 3 percent of the market that VA and HUD foreclosures represent.

Foreclosure Listings Increasing

As the market settled after the mortgage meltdown foreclosure listings also settled and fewer homes were on the market with a placard reading “Bank Foreclosure” in big red lettering. This was a good thing for the entire real estate market. Having an abundance of foreclosures brings the entire market down and it makes it harder for home owners, who would like to move, to get the appropriate price for their home as a similar home down the same street was sold for substantially less and the appraiser is using the foreclosure as a comparable sale.

This is just one of the problems when there are too many foreclosure listings in any area. Another issue is the television set that sits in everyone’s living room harping about the price of homes based on the number of foreclosures and this constant barrage of negative information makes most people sit on the sidelines waiting for the market to either implode completely or to correct itself. Meanwhile while they wait, others are buying foreclosure listings and making great investments.

Whatever the reason, a market can only handle so many foreclosure listings at any given time. The more foreclosures, the lower the market gets and this is a lesson the banks that were foreclosing and selling off realized too late. The market and their investments would have been better off if there had not been a rush to divest themselves of the toxic assets made more toxic by their own actions.