As most of the media has started to report, markets across the country have now moved solidly to a seller’s market. So for those buyers out there looking for a great opportunity, I can confidently say, that every home on the market is right now, a good deal. How can I say that? Well, most economist forecasts for housing appreciation combined with low-interest rates makes this market a fantastic opportunity for both buyers and sellers.
That being said, if you are looking to pay below market value for a home, there have always been only a couple of places to go to do that. 1) the county auction and 2) short sales or other distressed sales. Auction sales present the most risk, the least advantages terms but offer the very best values to compensate for the risk and the terms. I personally believe that the most you should pay for a house at auction is about 65% of the fair market value. If you’d like to learn more about buying at the auction, contact me by clicking here.
Short sales too can offer a better price considering the undesirable terms, which includes a long and frustrating approval process. The negative side of short sales is that you are often negotiating with an asset manager who may be very well versed in the strength of the market and ultimately may not be willing to approve that great deal you’ve waiting months to get. That being said, you should be able to purchase a short sale for 85% of fair market value, otherwise it’s not worth the trouble.
Let’s take a look at the supply and demand of short sales for Single Family homes in King County. As you can see, the supply of short sales has almost completely evaporated and the trend looks as if short sales may be a thing of the past within a very short time frame. You can see current short sales in King County Here
We see the same trend in Pierce County single family homes as well. You can see current short sales listings in Pierce County here.
The telling sign with the decreasing short sale supply is a solid indicator that the worst of the housing bust is far behind us. In fact, Lawrence Yun, the Chief Economist for NAR predicts “Probably 15% cumulative growth over 3 years”.
Which lends the question? Should you fight for the last few good short sale deals to save 15% or open your market search to every house, which could conceivable appreciate faster than the short sale approval process? After-all, paying fair market value for a desirable property is always a better deal than getting a deal on an undesirable property.
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