Foreclosures and Short Sales
What is foreclosure and how does it happen? Can I buy a home in foreclosure? Whether you’re an investor, homeowner or in the market to buy your first home, foreclosures are a large part of today’s real estate market.
Foreclosure is the final step in the process of a lender trying to recoup their money from a borrower who has defaulted on their loan. The bank either sells or takes back the home resulting in a foreclosure auction or bank foreclosure.
The first step on the road to foreclosure is the NOD or notice of default. After this there is a reinstatement period in the foreclosure process before the house is put up for auction. If the defaulted loan isn’t taken care of in this time period, a notice of sale is sent to the owner, posted on the property and in the newspaper and the home is put up for auction.
In this turning point in the foreclosure process, the home is either purchased by the highest bidder, meeting the reserve set be the bank to recoup their loan balance, interest and additional fees, or the home is repossessed by the bank. At the point, the home becomes bank or real estate owned (REO) property and can be purchased directly from them, often with a clean title.
In our local market this is the way that most people are introduced to foreclosure properties. After the owners are completely out of the property and the property is a REO. The bank then lists the property for sale with a local real estate company and its open to the public for purchase.
Bargain shoppers are on the hunt for foreclosures, so get ready to look for hidden gems. But first, you might benefit from some pointers. After all, buying foreclosures can get tricky — whether you’re making the purchase at auction, through a bank, or from an emotional and financially strapped homeowner, your going to want to do your homework. You’ll find many useful articles on purchasing REO’s and short sales in this website, or if you can’t find what your looking for contact one of our real estate experts to get all of your questions answered.
Short Sales
Short sales are becoming even more common due to the huge increase in the number of foreclosures, which are having an effect on home values across the nation. From 2008 short sales have doubled to average between 120,000-150,000 short sales per month, nationwide. Due to the current sub prime and anticipation of the more ARM resets, many people are considering short sales but are not clear on the short sale process and how it can be used to avoid foreclosure. A Short sale is basically a process which allows the borrower to sell the home for less than what is owed on the mortgage loan and allows the seller to avoid having their credit score hit with a foreclosure penalty.
Don’t let the name short sale mislead you. The term “short” does not refer to the time it takes to purchase a home but rather to the current borrower “shorting” the lender in the amount owed against the house. Purchasing a home through a short sale can be a great way to get a good deal on real estate, there are however some disadvantages. Short sales can be time consuming with some taking 6-9 months to complete a purchase. Not all of them will take this long but if you are considering putting in an offer on a short sale you must be willing to be patient. Also just because the seller agrees to a sales price it doesn’t mean that the lender will agree to it. Often time’s lenders will ask for more money, either from the seller of the property or form the buyers; it doesn’t matter to them as long as they get more money.
If you’re thinking of making an offer to purchase a short sale property, make sure to do your homework. It will also be in your best interest to find a real estate professional to help you through the long time consuming process. Look through our related articles in this site form more info, or if you can’t find what you’re looking for contact one of our real estate experts directly.
