The media has been talking plenty about the effect of foreclosures and short sales on housing market prices…it was on the front page of the Star Tribune again yesterday. While they may come with bargain prices, they also have a flip side. They are often in poor condition, which means your new home could become a ‘money pit’. Be cautious if you are buying your first home and have limited resources.
Another effect you may not have heard about is the lengthening of the offer process. It says in our Minnesota purchase agreements that ‘time is of the essence’ and that usually means that sellers respond to an offer within 24 hours or less. When dealing with banks in short sales and foreclosures, however, time is often of no essence.
As a case in point, I have clients who are right now waiting for a response from the bank regarding a short sale. They submitted their offer February 18th…it’s now 26 days and counting…and still no response from the bank. I attended a seminar on short sales recently where the presenter said the longest he had waited for a response was six months!
If you have a closing deadline, short sales (before foreclosure, but where the bank accepts less than the full mortgage balance as full payment) may not be your best option. Right now I’m thinking maybe my client’s proposed closing date may in fact be the bank’s response date!
