How Short Sales Can Be Risky

The number of houses available as a short sale has increased in the last few years in the United States of America. As is obvious, this means that there are a lot of potential homebuyers who are choosing to go for homes available on short sale as well. The big question then is if all the people who are choosing to go for short sales are making a good choice.

From certain viewpoints short sales are actually risky for the potential home buyer.

1. Short sale deals can take a considerable amount of time to finalize because banks need to approve offers. The time that a lender can take to close a short sale deal can be anything between three months to seven months. This delay can result in the potential home buyer losing out on other options.

2. With short sale deals, many lenders require the potential buyers to pay for appraisals and invest in repairs before the deal is finalized. This can result in this money being lost.

While the above mentioned and many other flaws of short sale deals exist, the fact is that the amount of money that an individual can save by choosing short sale offers or even bank foreclosures compared to regular MLS homes is well worth these minor inconveniences.

HUD Secretary at Versailles court (in Florida)

“Risk? What’s Risk?” This response from David Siegel after receiving the strategy board game Risk, could be applied to a wider area of his life. Mr. Siegel is owner of Westgate Resorts, a vacation timeshare company. His company made him very rich and he wanted to display that opulence in a new home in Orlando, Florida.

It was to be modeled after the palace of King Louis XIV-Versailles. It was to be 90,000 square feet, cost $100 million, and become the largest home in America. Obviously, no one would term this affordable housing.

Prior to the 2007-8 housing crisis and recession Siegel and his company were flying high; selling timeshares to a wide variety of people, often getting them to overextend themselves to pay for it.

Expecting his good fortune to continue, Siegel overleveraged himself in the construction of Orlando Versailles. Now he joins the ranks of so many Americans, trying to save his dream from foreclosure.

Add into this ironic mix Shaun Donovan, Secretary of HUD. He and several of his HUD homes staffers attended the premiere of “Queen of Versailles” a documentary of the travails of building the edifice. Mr. Donovan then spoke to the audience, reminding them that it was a representation of what has been happening across the country, the only difference was scale. Affordable housing and home ownership continue to be the American dream, and HUD homes continues to work to provide it.

Data Interpretation Makes the Difference

Surveys can be deceiving. How the reader interprets the survey makes all the difference in the world. Recently the Sun Sentinel ranked 20 real estate markets as the 10 best and 10 worst places to purchase. This brings up the question of whether a survey should dictate the decision to purchase. Ten cities received the worst ranking from real estate agents in the 2012 ActiveRain Survey.

The survey may be deceiving if you’re living in one of the cities ranked worst and this survey may just aid those new homebuyers looking for a bargain. The survey doesn't account for foreclosure listings that provide cheap homes for shoppers. Nor does it account for improvement in the market and the potential for a turn around.

Two of the qualifications for making the worst list include high unemployment and difficulty getting financing. For those looking for a home in the area who have a secure job and good credit, the low ranking could spell a bonus allowing these purchasers to secure a home at an even lower price.

When purchasers could easily access mortgage money, the price of homes skyrocketed. That’s because everyone could qualify as a homebuyer. Now, particularly in the worst ranked cities, mortgage money is hard to acquire. Every prospective homeowner with good credit and stable income should now yell “Halleluiah.” In addition, the cities are ripe with foreclosure listings, also lowering the price of homes. These cities and others across America, now hold great potential easy access to a home at bargain basement prices and cheap homes is what everyone wants.