Wave Off? No Way...Land That Thing!!!I recently had an international investor email me and ask me the following question: "Do you think Central Florida short sales are a total NO-GO?" Apparently he had heard some horror stories about short sales, and he wanted my opinion about whether we should include them in his property search.

Here was my answer. I hope you find it to be helpful.

Short sales are actually starting to speed up a bit already. Some of the banks are converting to electronic admissions using the Equator system. This will help the banks speed the short sale process.

As for the trend, short sales are going to be with us for a very long time. There are thousands of home owners across Central Florida who owe more on their mortgage than their property is worth. This will be the case until home prices climb back up to where they were before 2006. This could take five years, or it could take ten. There is no way of telling how long it will take, but the prices will climb.

There are two issues that you must understand when buying a Central Florida short sale. The first, obviously, is the fact that the sale is contingent on the seller's lender approving the sale. This means that once the bank starts to work the file they are going to have a market analysis done on the property. If the offered amount is lower than the analysis, they will most likely try to renegotiate the price. If the buyer doesn't come up to the fair market value (in the bank's opinion) of the property the lender will reject the sale and the buyer has wasted his time, as has the seller.

The second issue is the time it takes to close. We have to be patient and wait on the bank to start working the file. This can take a few months. Once the bank approves the short sale, the deal can usually close within 30 days.

With all that said, there is absolutely nothing wrong with buying a short sale if you are willing to wait for the bank and you are willing to offer fair market value for the property. Many investors are stuck in a rut thinking they can negotiate a deal the same way they could before 2006. In the current market, this really isn't a possibility.

For a short sale, you have to offer fair market value to get the sale approved. For a foreclosure, the properties are already listed below market value because the banks want to sell as quickly as possible. If you don't offer at least the listed price on a foreclosure you are wasting your time. They won't accept less, and they don't have to. They will sell for more than list price.

There are currently 3,622 homes for sale in Kissimmee, Davenport, and Poinciana. Of those; 1,713 are regular sales, 455 are foreclosures, and 1,454 are short sales. So, as you can see, more than half of these homes are either foreclosures or short sales. This means understanding the market and knowing how to take advantage of it is essential to the buying process right now. 

Keeping all of that in mind, there are some great homes for sale in Poinciana Florida, Kissimmee Florida, and Davenport Florida for great prices. There is no room for haggling, but you really don't need to. The deals are out there already.

My advice to you would be; if you understand the market as I've explained it, we can go ahead and include short sales and foreclosures in your property search.

All data was retrieved from the Mid Florida Regional MLS and is believed to be accurate.

Photo courtesy of Roy Mac at Flickr.