I
always have clients asking about foreclosures and short sales because
naturally everyone wants that "good" deal. Sometimes it isn't always
the best route to go. Many times the home isn't in the best condition.
A property is sold as a short sale or bank owned property because the
mortgage bills weren't paid and if they don't pay their mortgage do you
think they would spend the money to upkeep the home?It can get complicated so here's a quick rundown.
Short sales - The homeowner is behind on their mortgage and the value of their home is less than their loan. Pretty much the home will be sold for less than what they owe because of the current market value of the home is less than when it was bought. It is subject to lender approval. Most short sales listed hasn't been approved by the lender yet. It is just to attract an offer so they can submit it to the lender. An offer has to be submitted to the lender before they issue an approval. The approval is usually going to be in line with the current market value of the property. That is pretty much the short sale process in a nutshell. What you should take from all this is that the listed price on a short sale is probably not going to be the price it will be sold for because a lender approval is required.
REO(Real Estate Owned) - Bank/lender owned property. These are properties that weren't able to be auctioned off at a trustee's sale so it belongs to the lender now. They don't want to keep the property. It goes back on the market near market value for the most part. You are likely to get a REO property at the price listed. However, just like any real estate sale, it is a bidding war so one of the things preventing you from getting the property at the listed price is when another buyer makes a better offer.
Remember, the banks want to get rid of these bad loans from their balance sheets but want to do it for top dollars. You can MIGHT get a good deal, but it isn't the best route for most people.
As always, I like to share an article with you. View below.
4 Questions to Ask Before Buying a Foreclosure
DAILY REAL ESTATE NEWS | TUESDAY, JANUARY 31, 2012
Foreclosures can offer big bargains, but buyers need to be careful that they don’t get over their heads in purchasing a home that may need more repairs than they bargained for.
Foreclosures are usually sold as-is, and homes that are left vacant standing too long can have a lot of maintenance problems.
Real estate experts suggest buyers consider the following questions:
1. How long has the home been vacant? Be cautious of a foreclosed home that has stood vacant for more than a few weeks or had its utilities shut off a long time. Marvin Goldstein, a home inspector for many foreclosed properties, says a home can deteriorate quickly when heating, cooling, electricity, and running water have been turned off for awhile.
2. How old is the home? Goldstein says that homes that are more than 50 years old may have a failing plumbing system or inadequate electrical wiring.
3. How does the home look? Are there broken windows, gutters hanging down, or damaged siding? “Trust your instincts. If the house looks bad from the outside, it's probably worse than you think,” Goldstein told The Oklahoman.
4. Is there anything missing? Sometimes former owners remove anything of value from the home, such as built-in light fixtures, bathroom tile, water heaters, air-conditioning units, and hardwoods, says Bill Jacques, president-elect of the American Society of Home Inspectors.
Housing experts encourage buyers to get a home inspector to look at the property, even if it is sold as-is, so that home buyers know any repairs needed and cost estimates before they purchase the home.
“Buying a bank-owned home gives you the opportunity to enter the market at a very low price level,” says Dorcas Helfant, a past president of the National Association of REALTORS®. “You can find terrific values among foreclosures, especially if they're not in too bad shape. But, remember, these houses are discounted for a reason.”
