When Allen Beir, a sales and marketing director, and his wife Sarah, an accountant, got married last year, they knew they would need a larger home. Between them they had 6 children and Allen's 4 bedroom home just wouldn't be enough.
The Beirs had spoken with their lender and decided it would be easier to simply get approved for buying their new home, moving into it, then putting Allen's current home on the market. "It would simply be too much trouble to keep all the kids bedrooms clean and have all eight of us leave the house every time there was a showing" said Sarah.
SInce the Beirs could afford to by their next home without any contingency on selling their current home, they figured they'd look for some great deals on larger homes. "We were hoping to find a larger 5 or 6 bedroom home at a huge discount." said Allen. "Homes in this price range just weren't selling so we knew we were in a great position to negotiate a real bargain."
The part about the bargain turned out to be true. The Beirs bought a five-bedroom house in Copperleaf, an upscale neighborhood just outside Liberty, Missouri. And it was a steal at $325,000, a full $100,000 less than they would have paid just two years ago.
The amount of time it took to land the deal was another story. It was more than five months from when the Beirs first saw their dream home to the moment they held the keys in their hands. The reason: The home they bought was a short sale.
Not along ago, few people had even heard of a short sale, which occurs when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth.
If you're in the market for a home today, you're almost guaranteed to be looking at some short sales. Nationwide, 14% of homeowners are currently underwater on their mortgages, calculates real estate website Zillow.com.
The good news is that short sellers are likely to still be living in the home and some may even be current on their payments. That means these aren't the run-down, distressed properties that you often find among foreclosures; in fact, there's a good chance that some of the most deluxe homes for sale in Kansas City could be short sales.
Before you get too excited about buying a short sale, know that they generally aren't, well, short. For the sale to go through, the seller's lender must approve the price and agree to take the shortfall as a loss. That extra step can cause the process to drag on three times as long as a normal home sale.
But as the Beirs discovered, the hassles can be well worth it. Some buyers and realtors don't want to deal with short sales, leaving many choice homes with very few bidders. So if you're willing to brave the intricacies of the process, you'll be far more likely to land the home you always wanted at a fantastic deal-of-the-century price.
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