I feel sorry for the folks listening to Phoenix’s KKNT this afternoon during a segment with someone billing themselves as the “short sale shark.” Here were two pieces of misinformation provided in the opening five minutes of today’s segment.
Short sales are an exercise in “equity creation.”
No, short sales are an exercise in negative equity elimination. No equity is being created for those purchasing the property. Eliminating negative equity does not in itself create any true equity.
People buying short sales are buying properties “at a discount.”
At a discount when compared to what the last person paid, absolutely. But that doesn’t mean that the home’s being bought as a discount to current market value. It could be, but isn’t guaranteed to be. And more often than not, it isn’t.
I stopped listening after the initial segment as I simply couldn’t take it anymore. For those who are looking to purchase a short sale, here’s your best bet method:
1) Don’t bother making an offer on a short sale
2) Wait until the auction and see if the home reverts to the bank
3) Wait for the home to appear on the MLS with a valid list price, then make an offer
You’ll get answers much faster and, quite possibly, you’ll get the discount you were hoping for when you first started looking at the property.
As for today’s radio program, it’s further proof that from a financial standpoint I must be doing something wrong because there seems to be more money in telling agents and the public how they have to do things than actually doing them yourself.[tags]Phoenix real estate, short sales[/tags]