|We're trying to buy a bargain in short-sale
or bank-owned property but we can't seem to get the deal done, what's
We feel that Short-Sale and Distressed properties
are not suitable for most potential Buyers and that is is
simply wrong to direct Buyers who require financing contingencies,
property inspections and functional warranties on the condition of their
home to be wasting time offering on bank-owned properties which are sold
under strict "as is" conditions with no contingencies except Lender's
ability to grant title and possession.
Moreover, there seems to be a misapprehension that "short sale"
properties are, by definition, "better" deals than properties in the
hands of private owners. Many bank--owned properties are lacking
appliances, may or may not have functional air conditioners and other
costly apparatus and may have substantial condition issues requiring a
good deal of investment to bring them up to snuff. Additionally, there
can be frustrating and lengthy delays in even getting a reply to an
offer to purchase this type of property. Great deals can be had but a
situation like this might not be helpful if the buyer is an executive
relocating for business who needs a place to live and entertain (for
example) not a renovation project.
Prices have moderated across the board since the low prices of
financially distressed properties also drives down the cost of
privately-owned property even if the owner is not in money trouble. A
little perspective and self-awareness should be used before deciding
that only a bank-owned deal is "good enough."
For those investors looking to profit from the short-sale and
bank-owned property we would suggest you prepare yourself mentally as
- Are you willing to put up substantial cash deposit at the time
you make a purchase offer?
- Are you willing to forego quibbling about inspection and
condition issues both initially and during the pendency of the
- Can you afford (mentally if not financially) to waste a lot of
time waiting for a response to your "fair" offer or will this drive
- Can you close for cash or, if using finance, can you produce a
firm commitment to lend (not a prequalification) and reference
letter from an institutional lender.
- Can you live with a sales contract that does not provide for any
"weasel out" clauses including failure to obtain a mortgage and
which places your deposit at risk for forfeit?
- Can you stand to actually pay the "asking" price (or more) if
the deal itself is a bargain or will you simply feel deprived if you
can't chisel around?
The point of all this is that the people who will benefit from
distressed properties are "players" and can step up to the
plate and do what's necessary. For those who think the foregoing is
"unfair", this stuff is not for you.