Okay, so hate is a pretty strong word. Maybe a better description regarding my opinion of short sales would be “strongly dislike”. Short sales and foreclosures are currently all the rage and for very good reason. Banks have a large number of properties that they would like desperately to sell (the foreclosures) and there are many sellers who owe more than their property will sell for (the short sales) in our still deeply depressed Sevier County real estate market. There is however a huge difference between buying a foreclosure property and a bank-controlled (but not yet owned) short sale one.
With a bank owned property, the foreclosure has already occurred and the former owner (technically called the mortgagor) no longer has any ownership and thus no control of the property. A buyer needs only to make an offer and within a day or two the seller (the bank) will respond with an acceptance, a counter-offer, or an outright rejection if the offer is too far below the asking price. In most cases, the bank will counter the buyer’s offer even if they are ultimately willing to accept it. If the offer is accepted a closing can generally happen in less than 30 days, and sometimes in just a few days. There are currently 136 active foreclosures for sale according to our Smoky Mountain Association of Realtors MLS database. The same source reports that a total of 147 foreclosure properties have been sold in the past 12 months creating some very happy buyers and some rather depressed bankers.
Now let’s look at the short sale properties. In a short sale, the mortgagor still owns the property but cannot sell for the amount that they owe the bank(s). IF the bank agrees to take less than they are owed a buyer can purchase the property at a very attractive price. As we will soon see, the IF in this statement is capitalized for good reason. While there are 79 short sales currently shown as being available in our Smoky Mountain area there have been only 9 short sales closed since our board added a code for these properties several months ago. While many homes are advertised boldly by Realtors proclaiming their short sale status the reality is that very few of these transactions actually close. What’s more, they mess up the market as buyers make offers on the short sale properties that aren’t accepted but are held in limbo by the bank. This often goes on for weeks or even months while a decision is made (or not made as is sometimes the case). During this period any new offer will still be accepted and if it is better than the offer already received the new offer will now be the one being considered and the earlier offer is out. Most often this substitution happens without any opportunity to improve their offer price. At any point during the consideration period the property can be foreclosed by the lender. Often, while one department is considering the offer another division within the same bank is completing the paperwork to take the property back via foreclosure on the courthouse steps. Remember to even qualify for a short sale a borrower has to be behind on his loan payments. All of this frequently adds up to a general frustration on the part of the hapless seller, the would-be buyer, and the unpaid Realtor.
The moral of the story for buyers? In general, it is best to not waste your time with pursuing short sales as they will most often be a colossal waste of time for all involved. By concentrating on properties that the banks already own, or well priced properties that sellers can actually sell without getting permission from a third party, a Gatlinburg area real estate buyer can get an excellent value on a vacation home or a residence. For a free list of ALL of our area’s foreclosures (and yes, short sale properties) currently for sale please click here. For expert advice regarding purchasing or selling any Smoky Mountain real estate in Gatlinburg, Pigeon Forge, Sevierville, or other area of our market, please contact us.