Short sales and bank owned properties present a great opportunity to purchase a home or vacation property at a discounted price. But like Jesus said in the Book of Luke, “For unto whomsoever much is given, of him shall be much required “. Be prepared! Buying a distressed property is going to require a lot.
The obvious benefit of buying these properties is the cost savings. According to Real Estate Economy Watch, an independent real estate economics and information web site the average short sale price is “27% lower than non-distressed properties”. That’s a big savings. The problem is the length of time it takes to close on a short sale and the many hoops you have to jump through to get it.
The Crystal Coast market which includes Morehead City, Beaufort, Atlantic Beach and Emerald Isle, the wait time after submitting the initial offer can be 4 to 6 months. Most lenders will not even consider an offer from a buyer if they (buyer) haven’t first been preapproved and with a letter of intent from their bank.
“Short sale transactions have long been problematic for buyers and sellers alike, with typical approval times of several months after a homebuyer first submits an offer. Factors slowing down short sale approvals include lost paperwork, coordination with multiple investors, slow appraisals, and mortgage servicer understaffing.” Reports Real Estate Economy Watch.
The Crystal Coast has seen 17% of all closing over the past 12 months coming from distressed properties. That’s an extremely large percentage particularly when you consider that just 5 years ago short sales, foreclosures and bank owned sales weren’t even tracked.
But according to the National Association of Realtors, “The new-home market continues to struggle to compete against deep discounts from a glut of foreclosures on the market and a tightening of credit that is keeping more home buyers on the sidelines”
New construction and existing homes are having a difficult time competing against distress sales.
“Joel Naroff of Naroff Economic Advisors points out that builders of new homes face immense competition from an oversupply of existing homes on the market, specifically “distressed” homes that are in or near foreclosure” as reported by MSNBC.
But is the tide changing?
Economy Watch claims that “The first-time homebuyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009.”
Traditionally the Crystal Coast real estate market has lagged behind the national trends by 2-3 years. Could the supply of foreclosures be dwindling? Will the market place finally be able to start selling off the glut of inventory that has plagued this market since 2006-2007?
For years it was aid, “Now is the time to buy before it’s too late?” During the course of the years of it being said the reasons given for buying now has changed from availability, price, to financing and now to foreclosures.
So what do you think? Is now really the time to buy?