The Short of It

For the past 18-months foreclosed properties have gotten all the attention, but they are only one half of the distressed property inventory. The more likely encounter an Alameda Buyer will have is with a short sale. There are four times as many shot sales in Alameda as foreclosures, so I thought it would be a good topic to give a little more information.

Distress Properties come in two types of transactions: short sales and foreclosures. There are some differences between theses two types of properties transactions, but both require a lot of patience from the buyer, because the real estate transaction now has a bank included in the mix.

A short sale is when a homeowner is behind on his or her mortgage, or already in default, but has not yet been foreclosed on. The owner of the home works with the lender to sell the home for an amount less than what they currently owe on the property. A short sale usually occurs when the homeowner either knows they can no longer afford the home and is facing a default on the mortgage, or has already defaulted and is facing a foreclosure.

The bank is willing to sell the home for less to avoid the costly default process, so a short sale will happen when a property is sold for an amount that is less than, or “short” of, the current pay-off amount of the mortgage.

So if you are interested in these types of transaction here are a couple of things you need to know before making an offer on a “short sale,”

• Any offer must be approved by seller’s lender and this can be a long, long wait. It is not unheard of offers sitting for two months without a response.
  
• Because of the required approval process by the lender, closings on a short sale are often delayed by several weeks, if not months.
  
• A lender may not agree to, and thus change, the terms of the agreement made between the seller and the buyer.
  
• Lenders are overwhelmed in this market, so expect the process of buying a short sale or an REO to take several months (after you make an offer).
  
• Multiple offers are often made on one property because of the low prices. Even if your offer is competitive, if lender receives what they perceive to be a “better” offer, you could be out of the running all together.
  
• Always remember: until your offer is accepted by the lender, there is no contract. That means even if your short sale offer has been “accepted” by the seller, there is still no contract until the lender has given its approval.
  

So, if you’re the kind of buyer who is not in a hurry to purchase your next home or is comfortable with some uncertainty about that purchase and is willing to search through dozens of listings in hopes of finding a good deal, then including short sales may be for you.

Today’s Alameda Inventory

13-Apr-09
Total	160
94501	120
94502	40
SFR	96
Condo	38
Multi-Family	25
Short Sale	29
Foreclosure	7
Price Reductions	49
High List	$               2,345,000
Low List	$                  199,900
Link to Graph