How Do Buyers Finance Short Sales?
In our last post, we showed you how buyers financed bank owned homes in San Mateo County. This post, I’d like to talk about the differences in how San Mateo County home buyers purchase short sales, or pre-foreclosures.
Fewer All Cash Buyers in the Short Sale Market
Savvy San Mateo real estate investors who have cash have realized the challenges surrounding purchasing short sales. As we showed you in the bank owned homes segment of the San Mateo real estate market, 31% of bank owned homes are purchased with all cash. In the short sale market, only 16% of homes are purchased with all cash.
Why are Investors More Interested in Bank Owned Homes?
Buying short sales is a very uncertain process. Though we have one of the highest success rates in the country (at around 30% of all short sales listed closing escrow), short sales are still loaded with a lot of uncontrollable variables and take months to sort out. For more information about these variables, check out a previous post, Why San Mateo Short Sales Fail.
Some Truths About San Mateo Short Sales
We’ve written a whole series of posts about short sales and why they are so problematic for buyers. One of our most popular is the Truth About San Mateo Short Sales.
Short Sales Take Much Longer to Close Escrow
Of the 391 bank owned homes that sold in San Mateo County in the last 6 months, they were on the market for an average of 56 days before they accepted an offer and were in escrow for 35 days (this is the number of days between when an offer was accepted and when the property sold).
Of the 339 short sales that actually sold in San Mateo County in the last 6 months, they were on the market for an average of 104 days before accepting an offer and were in escrow for 98 days. Remember, these figures do not include the short sales where the seller accepted an offer and the bank took 8 months to come back to the buyer and say no. These figures ONLY include the short sales that actually closed escrow.
Short Sale Buyers Need Loans
As you can see in the chart above, 84% of buyers purchasing short sales in San Mateo needed financing of some sort. Most cash buyers have decided to put their money in the bank owned market and go for the more sure thing.
Remember, Not all Short Sales are Good Deals
Some of these homes you see on the market as a “short sale” were purchased at the height of the market. One property in Belmont I saw listed for sale last summer at $725,000 as a short sale was recently taken back in foreclosure and was recently listed on the market for $650,000. Keep in mind, the single family home market in Belmont has been inching up for the past several months, so last summer this house was definitely not a $650,000 house. However, the owner had it on the market as a short sale for $725,000. Buyers who thought all short sales were good deals would’ve been sold a bill of goods here.
Planning on Buying a San Mateo Short Sale?
If you’re planning on buying a short sale in San Mateo, we’d suggest you do as we do and ask these 15 Questions Before You Make an Offer on a San Mateo Short Sale. With the answers to these questions, you’ll be able to get a much better idea how likely your chances of a successful outcome will be.
Need a Buyer’s Agent? Call Us…It’s Free!
Did you know buyer representation is free to the home buyer? That’s right! The buyers agent’s fee is paid by the company that lists the property. So, it costs you no more to be represented by your own agent.
Thinking of going through the listing agent to save money on commission? Don’t bother! They usually won’t refund you the money and they have a fiduciary duty to get the seller the most money possible. Sounds more to me like going that route could cost you money. Besides, you wouldn’t hire the other sides attorney if you got sued would you?
Call us at (650) 655-2500 or email us at info@LivingWellinSanMateo.com to schedule a no obligation consultation.
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Raymond Stoklosa, Chela Stoklosa and Rebecca Williamson are Realtors with The RayChel Realty Group specializing in Santa Clara and San Mateo Real Estate.
Raymond Stoklosa, Broker/Co-Owner
Chela Stoklosa, Realtor/Co-Owner
