Short Sales in Florida Are Not Short
Although the words “short sale” make people think there’s a bargain home in their Florida future, the word “future” is the really the operative word in these transactions. If you’ve ever made an offer on a so-called short sale home in Florida, you”ve probably come up with a new definition for the word, “frustration.” That’s because so-called “short sales” in Florida usually take a very long time.
The term, “short sale” is used to describe a property whose owners are short on the cash needed to cover expenses. They have ceased paying their mortgage, but the property has not yet gone into foreclosure. Many people still use the term “quick sale” when referring to a property that’s in short sale, and they expect to save money and complete the sale process with alacrity. They should expect to be disappointed about the time period for the sales process.
May not be a big saving.
Buyers searching for new home in Florida may also be unpleasantly surprised about the saving money part. People who plan to purchase short sale properties in Florida do so on the premise that they will saving money. Their reasoning is that the short sale property’s asking price may be from 10-20% less than that of a house where the owner is still in control
But, consider this aspect of purchasing a short sale: while a short sale property may save you money on the purchase price, there are often other costs to consider. If the former owners are not able to pay any of their bills, they probably moved out. So the house may have been abandoned and neglected for quite some time.
In this kind of circumstance, the owners probably shut off the electricity. In the sunny but humid climate of South Florida, that means the air conditioning was not running. A lack of air conditioning usually leads to an abundance of mold and mildew. If the short sale takes place up north where it’s cold, and the electricity was turned off, lack of heat leads to frozen and burst pipes.
Be prepared to wait.
When you sign a short sale contract, there is an additional form, the short sale addendum, that goes along with it. This addendum informs you that you’re going to wait at least 45 to 60 business days for the lender’s decision.
Often, you will wait or even longer – from 90 to 180 days or more – before you even get a response to your offer. That response, is “no,” two thirds of the time. Considering the state of the housing market, it seems hard to believe that banks struggling with so much excess housing inventory need extra time to make such an obvious decision. But, consider this fact, also: if banks were so smart, they wouldn’t be in the position they’re in today.
Now, add that waiting period to the time the house has already been abandoned. Then, add the costs of repairing that property to price your short sale purchase price. If the numbers make sense to you, and it still seems worth it, by all means go for it.
If you’re not in any rush to purchase a new home, then it may be worth thinking about buying a short sale. You may be one of those fortunate buyers who locates a real bargain. But before you make a final decision, be sure to get a qualified inspector go through every inch of that property very carefully. Otherwise, that short sale may leave you short of cash, too.