Many buyers in San Francisco either shy away from short sales because they seem too complicated, or gravitate toward them with the goal of getting a good deal. The reality is that short sales can be lengthy, disappointing, and simply facilitate the bank getting market rate for a property.
But properties being sold through short sales can sometimes be decent deals. Lenders want to minimize their losses, but they’re not going to get emotionally involved. So they will typically settle on a price that reasonably appears to be market value—but can sometimes be less than market value, which is good for buyers.
Determining whether you should move ahead with an offer on a short sale property largely depends on many factors. But the biggest one of all is whether the sale has already been approved at a particular price. Take 1885 Jackson #403, for example. The 2BR/2BA Pacific Heights condo with one-car parking was listed in way back in August 2010 for $599,000. It’s seen three price reductions since then, and finally went into contract recently. However, the buyer was not able to obtain financing, so the property came back on the market at the approved short sale price of $425,000. This means the lender had agreed to accept that price, and the next buyer will not have to deal with the long approval waiting time for which short sales are notorious.
In the case of Jackson, the buyer is being asked to pay $15,000 to cover charges and fees that the lender won’t approve. And they’re looking for a cash buyer. But at this price, the unit would make a first-time home buyer very happy, or an investor who could use the property as a rental unit.
So keep your eyes open for approved short sales; they may represent good deals, without the wait.