Short Sale Vs Bank Owned

So I have had a lot of people ask me lately what the difference between a short sale and bank owned property and which is better to buy.
I think that has a lot to do with personal preference, patience and desire.
The short sale procedure can be a lenghty process. It is a good alternative to a forclosure on the record of the seller. The credit is slightly smudged but does not put the permanent 7 year halo on the credit of the seller. It has better tax benefits for the seller who is an investor and it avoids eviction.
Because the short sale ends in the lender loosing funds they are never quick to agree to this procedure without careful consideration of the market and how it will affect them as an institution. Since most lenders are not equipped to handle the amount of short sale requests that they receive they often work at a snail's pace to get your request processed. I have seen anywhere from 45-180 days for a short sale to be accepted by the bank.
Some Realtors use a middle man or 3rd party negotiator who have prior lending experience or have made good connections with these institutions in order to more quickly process the short sale along. Some Short Sale contracts take so long that the buyers fall through. If the bank approves a price based on the 1st offer, the Realtor can then advertise that approved price and once the new contract is presented the new contract will get pushed through a lot faster than the first. Be aware that most bank acceptance offers are only good for about 30-45 days and may need to be extended for the next sale
During the Short Sale process the buyer, seller and Realtors are subject to each banks indivdual time frame, procedures and ability to handle the short sale request at hand. No two banks are alike and no two will require the same paperwork or procedure. So make sure as a buyer that you are willing to wait it out. Some could happen quick and some may take 6 months.
As I said it depends on how much you really desire "THAT" house!
Now the difference between short sale and already bank owned homes... yes that depends on the home. However, in my experience, short sale homes (especially owner occupied ones) seem to be presented in a lot better condition then the homes that have already been foreclosed on. The people who are trying to negotiate a short sale want a buyer and so they are going to try their best to keep their home in tip-top shape. (I have seem some homes that are going short sale and not so nice, these in my experience are homes that were occupied by not so clean tenants).
Bank owned homes on the other hand that are in close to perfect condition have been few and far between and taking a buyer to see them often time results in excitement for such a great "deal" and ends in disappointment when you find out the home currently has multiple offers or often times the offer that was accepted just hours ago. The other bank owned homes that seem to last a little longer on the market tend to be those that are missing appliances, sometimes cabinets, light fixtures, thermostats and often air conditioning units as well, these homes tend to have stained up carpet, dirty walls, sometimes drywall issues and so on. If you are the ultimate in the fix up mood, you would love a challenge... but let me make sure that you get that much needed home inspection, and if you are not going to do all the work yourself you get quotes during your 10 day inspection period so you are aware of what this home may cost you. In reality the home that is the same in better shape for 15-20 thousand dollars more, may be more cost effective for you to buy then the one you have to put 10-15 thousand worth of work into to get it liveable. The $5,000 savings just may not be worth all your time or the headache of organizing all the repairs.
What ever your decision is, make sure you do your homework, you are well informed and you use a good agent and home inspector who will be looking out for your best interest in the transaction.

Is it a Buyers Market?

Just wanted to post a quick update as to how interest rates are doing this new year. Everyone is out looking.... is it time for you to buy now? Well, I have sure seem a great amount of "deals" out there in the past few weeks, if you are quick enough. I have run into many situations where by the time you see the home your client is interested in, since it is very low in price, there are multiple offers and it can be anywhere from 10,000 dollars to 50,000 dollars higher than what the agent has it listed at. Is this a good strategy or is it creating another waive of buyers bidding on the good homes and the homes priced slightly higher loosing the advantage? I think that if you take a 3 bedroom 2 bath home in the Queen Creek area that is in decent condition and you place it on the market for say 69,000 dollars you are definitely going to get more lookers than the same floorplan 2 streets over listed for 85,000 dollars, but is that 69,000 dollar deal really selling for 69,000 when it closes escrow? This is not likely. So I recommend buyers to try and look at everything as a whole and not just the cheap "deals" that don't really prove to be "deals" when it is all said and done anyway and you could have saved yourself the trouble by going to look at the 85,000 dollar house and putting in an offer that gets accepted without all the multiple offer senarios and over bidding. Set a price for yourself and take a look at everything in between your high and low so that you get the best possible picture and overall choices that are out there. Avoid only seeing homes that sound good and are the cheapest. Chances are by the time your agent sends them to you, or you find them online, if they truly are a good "deal" they will have multiple offers already or you will be competing against several buyers and may even be priced out of the range by the time they accept an offer. This is not only disappointing but frustrating.

I will post last weeks interest rates below courtesy of Quicken Loans.

Remember, many things affect the mortgage rate you may qualify for, including credit score, income, debt, and home value.
Mortgage rates on a typical $240,000 home loan (for a $300,000 home with a 20% down payment of $60,000) from Quicken Loans for Friday, February 6, 2009 (as of 1pm) are as follows:
30-Year Fixed
Monthly Mortgage Payment (includes taxes and insurance) - $1,528
Mortgage Rate - 4.875%
APR - 5.10%
Points - 2
30-Year VA Loan
Monthly Mortgage Payment (includes taxes and insurance) - $1,638
Mortgage Rate - 5.50%
APR - 5.651%
Points - 1.125
FHA Express
Monthly Mortgage Payment (includes taxes and insurance) - $1,743
Mortgage Rate - 5.50%
APR - 5.639%
Points - 1
15-Year Fixed
Monthly Mortgage Payment (includes taxes and insurance) - $2,094
Mortgage Rate - 4.50%
APR - 4.846%
Points - 1.75
Rates will vary based on your specific situation