Is it Time to Move Up or Down?

If you are considering a move-up or a move-down there are two ways to do it.

Option One: Buy first and then sell.

Option Two: Sell first and then buy.

If you have the means, then Option One is the way to go and you can include short sales in the mix of replacement properties.

If you are confined to Option Two, then here is what you might consider. Make an offer on a standard sale and ask the seller for a “contingency” to sell your home. We don’t see this very often because you will have to pay a premium to the seller. A more common way is to list and get an offer on your home first, and then while in escrow go find a motivated seller and make an offer “contingent” upon “closing” your current home.

As a rule, REO asset managers and short sale banks will not accept contingent offers. Third, you could sell your current home and then rent a home for six months while you look for that great deal. Or, if you are brave, you could live with family. Sometimes the buyer of your first home will “rent back” to you as well.  Most of our clients will say that none of those options seem too inviting. If you really need to move, then the hassle is worth it and there are great deals out there to be had.

One more thing about short sales that is very difficult for buyers to grasp is that the price you see on a short sale listing may have nothing to do with reality. More than one buyer has said, “If I offer full price and the seller signs it, then why can’t I buy the home for that amount?”  Here is the reason. The seller still owns the home but the seller owes more to the bank or banks than the house will sell for. That means that the bank will have to agree to a major loss or “short payoff.”

Many times the listing price is a very low number with one goal in mind–get an offer and get it to the bank before a scheduled foreclosure sale occurs. If a valid offer comes in prior to foreclosure then there is a good chance the bank will postpone the sale long enough to evaluate the offer. The bank will order an appraisal of the property and of course the bank wants to sell as close as possible to that number.

Don’t forget that short sales and bank owned REOs are sold “as is” which means just what it says. The buyer is responsible for any repairs and usually any termite remediation.

Happy house hunting.