What Does Short Sale Mean?

Buying Short Sales: What You Need to Know

As the real estate market remains volatile, one of the best options for many new homebuyers is purchasing a short sale home. But, what does "short sale" mean? A short sale is when lenders have the opportunity to sell a property before the bank forecloses on the home rather than after. While buying short sales creates the opportunity for real estate investors to pay well-below-average housing prices for properties within ideal locations, there are still drawbacks.

If you're interested in buying short sales, here are a few things you need to be aware of:

Why Banks Short Sale Pre-Foreclosure Homes

The last thing a bank wants to do is own a property secured by the bank's loans. When a property owner is in default and owes more than what the home is currently worth, the bank will work with the seller to offer the property for less than they owe on the mortgage loan.

How much money will banks take off? When buying short sales, how much should I expect prices to fluctuate? On average, banks estimate that holding on to the property after foreclosure will cost up to 18 percent of the home value to complete the inspection, appraisals, repair and maintenance. Instead, it is a much easier and financially sound decision for banks to sell the home "as is" to avoid any third-party inspection process.

What to Consider Before Buying a Short Sale

Buying short sales might seem like a good deal for the buyer, but that's not always the case. Here are three major conflicts buyers and sellers face when a short sale, pre-foreclosed home is on the market:

Time: Don't let the name fool you. Buying short sales takes a very long time. There's a whole gambit of scenarios of why a short sale might be delayed, but many of the hurdles buyers have to overcome have to deal with secondary financing on the homeowner's original mortgage, bank processing delays and private mortgage insurance policy breakdowns. Buying short sales is a very complex process, which can leave the short sell buyer in housing limbo for up to six months.

Condition: Short sale homes often need additional maintenance and repairs. When the current property owner is unable to pay the mortgage on the home, more often than not the condition of the property diminishes over time. Additionally, short sale homebuyers should take into account that the property will have had more than one previous owner, which adds to the wear and tear.

Lender Restrictions: Banks can renegotiate a short sale at the last second. If a new law passes, the market begins to change or the bank finds out more information about the property, they reserve the right to change the terms of the contract at any point in the process. Banks will also refuse to pay for extra services like seller closing costs or inspections. If you want something specific inspected on the property, you're probably going to pay for it yourself.

Short sale homes are the real estate market's diamond in the rough. It's true that buying short sales can be a very tricky process, but for the flexible and patient homebuyer, the short sale home can be the dream house they've been searching for.

How to Avoid Rental Scams

You find yourself in the market to find a new place to rent, and you are searching through Craigslist to find your next place.  Craigslist is a great place to search but be forewarned, there are many unscrupulous people out there ready to take your money.

There are a number of fake rental scams on Craigslist and other classifieds.  People are out to steal your money so here are some tips from the Better Business Bureau on how to avoid these scams.

The email addresses they use usually are from yahoo, ymail, rocketmail, fastermail, live, hotmail and gmail, and they also post ads under anonymous craigslist addresses. They frequently change their aliases.  Some things to watch for:

• The deal sounds too good to be true. Scammers will often list a rental for a very low price to lure in victims. Find out how comparable listings are priced, and if the rental comes in suspiciously low, walk away.
• They use photos stolen from other property advertisements or from home furnishing catalogs or hotel websites.
• They use fake names, often stolen from Facebook profiles or networking sites. Often they assume the identities of previous victims.
• What they all have in common is that sooner or later you get a request to transfer funds via Western Union, Moneygram or some other wire service.
• Never under any circumstances, wire money at the request of any prospective “landlord” via Western Union, Money Gram or any other wire service.  Even if they tell you to wire the funds to a friend or relative’s name “to be safe,” it’s a trap!
• Never send a scan of your passport or other ID.  These thieves will use your identity to scam others. Ask to see the landlord's ID - record all the information you can from it.
• Use a browser to search for the person's name who you're dealing with. Be sure to add quotes around their name. You could add the words "fraud" or "scam" at the end of your search terms.
• Use reverse directory look up if the person has given you their telephone number. It's important to double check that they are who they say they are.
• Visit the local county courthouse to look up property ownership for the property in question. Who really owns it? Is it the person you're dealing with? Or someone else?
• Scan any provided photographs carefully. Do they match up with what you've seen in person? Do they look like they all came from the same place?
• They don't ask for an application or permission to check your credit? That's a red flag!
• Considering the current state of our economy and the rise in foreclosures, ask the landlord if they're current on their mortgage payments, and then get their answer in writing.
• Consider using another method for obtaining a rental, i.e. real estate agent, going through a rental agency, etc.
• Always check bbb.org to see if the “company” has any complaints.

New Wal-Mart Coming to Cedar Park

Retail giant Wal-Mart expects to build another store in Cedar Park on the northwest corner of RM 1431 and Ronald Reagan Blvd.

The 150,000-square-foot store will employ about 300 associates, said Kellie Duhr, director of public affairs and government relations for Wal-Mart.

Wal-Mart has not announced construction dates or a timeline for opening the store, she said. Cedar Park Director of Economic Development Phil Brewer said he is excited Wal-Mart chose Cedar Park as the site for another store.

“It obviously is an economic impact from a tax standpoint, from ad valorem and sales taxes generated,” he said. “Typically your big box stores like this are going to produce something like $80-$100 million in total taxable sales.