In view of the layoffs we have all seen in our area, there has been a lot of talk and questions about foreclosures, and speculation that the number of foreclosed or distressed properties are about to skyrocket.
Today, I want to bring light to what is actually taking place in this part of the housing market in our area and the nation, as well as sprinkle some information into the conversation you might have with your Realtor about purchasing a short sale or foreclosed properties. The do’s, don’ts, why’s and why not’s.
The numbers: CoreLogic, in their recent National Foreclosure Report, reported that foreclosed properties have decreased by 23.2% since this time last year! This report also showed that foreclosures have decreased in 49 of 50 states and that 45 of those states have posted a yearly decline! With homeowners more than 90 days behind in their mortgage payment at 3.1%, the lowest level since November 2007!
The percentage of homes that have actually been Foreclosed on is at 1.1% which is also the lowest level since November 2007!
Welcome back economy!
The Good News: While Foreclosures do remain a part of the market, the amount of homes foreclosed on has drastically decreased! This along with the fact that the rate of homeowners currently delinquent in their mortgage is also decreasing could mean we can say “Bye Felicia” to the worst of the foreclosure crisis.
What is a short sale?
A short sale is very typically the sale of a home that will be short on the payment of the loan amount, not in time to close. This can be true for various reasons – the home could have been purchased, built, or refinanced at a time where it appraised for more than it can currently sell or appraise for and for whatever reason the homeowner is unable to continue to pay their mortgage or loan.
What does this mean for Buyers? Short sales can be a wild roller coaster ride of a purchase where you might end up with a good deal in the long run. In a short sale you will actually be making an offer and negotiating with both the Seller AND their lienholder. Every – say it with me – EVERY short sale is different! Offer negotiations can be very difficult as one party can agree only to reach the second party and run into road blocks. Some banks will not discuss short sale terms until there is an actual offer on the property. Some banks will forgive the Seller the difference between the short sale amount and some banks will require the Seller to pay the remaining balance of the loan and can go so far as to garnish their wages. Your take away should be: short sales can be a great thing if you are accompanied by a Licensed professional and are ready to strap in and ride the short sale roller coaster.
For Sellers: Consult a Licensed Real Estate professional that has a good understanding of short sales as well as experience in selling homes that have been approved for a short sale. Ryan Brown, Lead Agent of the Four Corners Home team is a broker I would recommend hands down!
The good, the bad, and the ugly of buying a foreclosure:
It has been my experience in working with Buyers that a lot of people think they will get a smokin’ deal if they buy a foreclosed home, slap some paint on it and put it back up for sale. Don’t get me wrong, this can be the case in a very limited amount of homes. A lot of homes that have reached foreclosure have done so because the homeowner came to dire financial straits and was unable to properly care for the home and the property.
What could that mean for buyers? Just like short sales, purchasing a foreclosed home can be like riding a roller coaster. Every foreclosure purchase is different depending on the requirements of the lienholder and how they choose to sell the property. Some lienholders will want offers to only be submitted online and will let the offers sit for a few weeks before returning to the potential buyers with a request for your highest and best offer, only to repeat the process until the wind blows south and the northern white owl hoots three times before they accept one of the offers.
Most foreclosed properties have had their utilities turned off and have sat vacant for number of months if not years depending on how long it took the property to come through the court system and become available for sale. Quite a few unsuspecting buyers have been caught out when they went to have the utilities turned back on, both in the fees that were required by the utility company and also condition of the home after having them turned back on; as well as the purchase of the home taking months instead of days to close which can cause daily fees to accrue against the buyer until the property closes. Unlike traditional home sales, most lienholders will not or are unable to pay for anything to help you in the purchase of the property, such as termite inspections, repairs and closing costs. The long and the short in my opinion is to do your homework on that property, call the utility companies, talk to the neighbors; and hire a Licensed Professional to help guide you through what could be a landmine or goldmine of a purchase.
For Sellers: Communication! Talk to your lienholder, talk to a Licensed Real Estate professional who can help guide you through the options available to you in the current situation before going to foreclosure.
Thank you for taking the time to read my blog! I am passionate about communication, information, and education! It is my belief that every family should feel confident when buying and selling a home whether it be a first time home purchase all the way to a real estate investment.