National REO Liquidation Auction Vs Short Sale
Have you noticed how many houses are for sale on the MLS? Not very many and those that are on the MLS are typically short sale listings. For those of you who are new to this term, short sale, that is when the bank will accept a price for the house that is less than the amount owed by the current owner of the property. In a nutshell, the homeowner is upside down in their mortgage, they owe more than their house is worth, and they are trying to get rid of this albatross by “selling it short.”
The challenge of trying to buy one of these listings is that there is no guarantee that you will get the home and the banks are taking months, if not years to negotiate these deals. Furthermore, the deals that are going to close are usually cash deals because, with the lack of inventory, the banks are driving hard for the best terms and accepting the best offers– which tend to be all cash offers.
As an example, a friend of mine just purchased a house as a short sale that she has been negotiating for over a year. Luckily for her, it’s an investment property because if she had to sell her current house in order to get the new one, she’d have been sitting in limbo for quite some time. I don’t know about you, but that’s not a comfortable limbo to be in.
Another example of a current short sale transaction that I’m aware of is this: my sister wants to buy a new home because her family has expanded and they need additional space. She has a home she owns with equity but wasn’t getting any short sale offers accepted in a timely manner and had a contingency based on the selling of her current home. Again, a very untenable position, so they decided to sell their home with equity, rent for a year and launch many offers on short sales, hoping to land something. Good luck with that, sis!
Well, there’s another alternative to sitting around waiting for a short sale to be accepted. The other largest outlet of houses for sale besides the MLS is a national REO real estate liquidation auction. I’m not talking about trustee sales or sheriff sales which host auctions but rather I’m talking about the large national auction houses, of which there are a few, that sell the bank’s inventory. The Banks are liquidating their foreclosed inventory through these outlets because it’s fast & easy for both seller and buyer.
Here’s why the banks like it: banks put their inventory up for sale with an auction house. In month one, the auction house hosts the open houses & sell the properties. In month two, they finalize and close the transactions. Very little paper work for the bank, very little use of their resources–especially compared to a short sale with all of the negotiations, the paperwork, the tracking and the hassles involved in that transaction.
Here’s why it benefits the buyers: in month one, you visit the open houses and define your target house and target price, attend the auction and buy the target property. In month two, you close on the transaction and move in. No waiting, no worrying.
Buying at auction is a much more secure way to purchase a new home than to try to buy a short sale. Don’t you think?
What are your experiences…..