As little as six months ago short sale buyers could be fairly confdent that the list price was what a lender would accept, and maybe even a little less. Things have changed….significantly. In the course of performing their due diligence with respect to reviewing offers on short sale properties, lenders are watching the market carefully. As it sometimes takes 3 to 4 months to review and consider such offers, lenders will revisit the value of short sale properties towards the end of their approval process. What they are finding is that the market value may have improved significantly during the review process, and they will counter with a higher price that reflects that change in value.
Thus the bargain hunters, in spite of their patience with the long review/approval process, do NOT get what they anticipated: a great deal at the lender’s expense. They still get a “good” deal, just not a great deal, which for some is more than they are willing to accept. Beside the disappointment of not getting the price they thought they would, for some it means that they can no longer afford it. Add to that the fact that prices on ALL properties they might have considered may have increased while waiting.
Short sale shoppers have to seriously consider whether it is worth it to wait for “the good/great deal” while the market is improving and prices increase. It may be alright for investors, they can afford to wait. But for home buyers that intend to make it their home, they will now have to weigh the odds on how their offer will be countered by the lender on a short sale versus taking a more conventional approach to the market. What you thought was a steal at $250,000 may not be very appealing when the lender counters at $275,000, especially if there are other non-short sale properties available at a similar prices.
A good broker can help a buyer by tempering their expectations with this information. In addition, the broker can conduct a camparative market analysis, same thing we do for sellers, that should help anticipate the odds of whether a short sale list price will indeed be a price that a lender will approve. in the end.
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