This is going to be a multi-part entry on short sales detailing what they are, what they aren’t, why they’re not bad for the real estate market, why they ARE bad for the real estate market, and whether or not you should look into purchasing one.
First lets get caught up on some terminology that some home buyers & sellers might not understand fully.
Short Sale: A Short Sale occurs when a home has a mortgage for more than the homes value, and the seller needs to sell because they have endured a hardship and can no longer make their payments. For more information on what a short sale is, and more importantly, what a short sale is NOT, please see this post which details “The Makings of a Short Sale“.
Foreclosure: A foreclosure is a property that a bank has already taken back from a seller. It now belongs to the bank and is classified as an REO (Real Estate Owned – i.e. by the bank). For more information, please see “What is a foreclosure and why should I look for one?“
Resale: A resale property is a piece of real estate that is being offered for sale by a homeowner who has lived in the property (technically even if only for one night).
Spec Home: A Spec Home is a home built by either an investor or as builder inventory to re-sell for profit (you are speculating that the home will sell for more than it cost you to build it). This is much more prevalent in an appreciating (Sellers) market because the risk of taking a loss is much lower when values are appreciating – however in a declining (Buyers) market this is a big gamble, as you severely increase the risk that the home you paid $200,000 to build, may shortly be worth only $180,000. For more information about investing in spec homes, please see “Build Houses in Hernando County Florida and Sell Them for a $50,000 Profit in 3 Months!!!“
Stay tuned for the next installment (or better yet, sign up for our RSS Feed by clicking that big bright orange symbol in the upper right corner of the site) where we’ll discuss the positive and negative aspects of short sales, and how they can affect you, the potential buyer.
Take care, and as always, if you have any questions, feel free to comment below, call my cell at 352-397-5182, or email me at Josh@HernandoLuxuryHomes.com.
-Josh
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About the Author
Josh Hanoud is the #1 Top Producing Agent at Tropic Shores Realty in Spring Hill, FL and in the top 3% of all real estate agents in Hernando County, Florida (2007). He also happens to be the co-founder (along with Natalie) of the
Hernando Luxury Homes website which aims to showcase the best properties that Hernando County and the surrounding Nature Coast has to offer. Whether buying, selling, relocating, or investing - Josh & Natalie are proud to offer a higher level of service. Contact them today at 352-397-5182 or Josh@HernandoLuxuryHomes.com to see what they can do for you.
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