5 Short Sale Myths Buyers Should Not Believe

With the increasing popularity of short sales, it is not surprising they are enjoying much buyer interest. Unfortunately, when it comes to short sales, it is not only the sellers who suffer from misinformation. Here are the most common myths buyers might encounter:

Myth #1: Foreclosures are cheaper hence a better investment.

Yes, foreclosures are relatively cheaper but short sales are generally in a much better physical condition. So at the end of the day, you will be paying more for the repair and renovation done on the foreclosed home.

Myth #2: Short sales are a waste of time as lenders choose foreclosure.

This myth has been debunked so many times but many still do not believe lenders are not into short sales over foreclosure. For the longest time, lenders were more willing to initiate foreclosure than agree to the sale of the home for less than its market value. After getting stuck with skyrocketing foreclosure expenses and ballooning inventory, they are now more accommodating of short sales.

Myth #3: Short sale negotiations are adversarial.

Certainly not true as both sellers and lenders are willing to negotiate so everyone will come out a winner in the end.

Myth #4: Making multiple offers is a good idea.

Some buyers think it will help them secure a short sale home but it actually hurts the industry. Consider a situation where a buyer made an offer to 3 sellers and each one has been accepted. The poor seller might lose the chance to avoid a foreclosure when the buyer failed to make good on his offer. For this reason, a lot of sellers require earnest money deposit.

Myth #5: You can buy a short sale home without a short sale Realtor.

It can be done, but it would be really difficult. Besides, many lenders require the buyer to work with a short sale Realtor to expedite the transaction and some even shoulder the commission by as much as 6%.