Many people out there want to take advantage of this buyer’s market and scoop up an excellent deal. Many are very successful at this, actually buying real estate for pennies on the dollar. Others, have no idea or clue what to do. The first thing one needs to ascertain is? “Am I a short sale or foreclosure buyer?”
What’s a Short Sale?
A short sale is a property that is currently owned by a party that can no longer afford the mortgage payments. In this declining market they also have found that they owe more on the house than the house is worth. Therefore they have decided to try to sell the house for less than the mortgage owed and will negotiate with the bank once multiple offers have been placed on the home.
What’s a Foreclosure?
A foreclosure is a bank-owned property. The home was once owned by someone, but mortgage payments were missed, the bank accelerated the loan and took possession after the equitable right of redemption period had expired.
Both types of deals can be quite lucrative for the buyer looking to get an excellent deal. But?
Buyer Beware! Foreclosures are usually sold, “As Is.” Typically there will be no property history and certainly no disclosures to tell you if something you can’t see is wrong. What you see is what you get. But, you will not know if there are broken pipes behind drywall! You will not know if the basement has flooded in recent years. You will not know the age of the roof. You will not know if the electrical has been updated. Most of these questions can be handled by a professional inspection. However, some problems will not be available to the naked eye of an inspector.
Another question is timing. If you expect to put in an offer on a short sale or foreclosure and expect a timely answer . . . you are probably not a great fit to be a short sale/foreclosure buyer. In the current market, banks are holding more real estate than ever before. They also do not have the systems in place to handle all the inventory. This process is very time consuming and frustrating. Most banks want to see that they have multiple offers on a property before they will entertain any offer. They do not want to see offers with contingencies in them. The cleaner the offer, the more attractive it is to the bank. This goes for short sales as well as foreclosures. I have seen this process take as little as one month and as long as six months. If you are on any kind of deadline, these sales are not for you.
If you are patient and have the time to wait and have access to the plumbers, electricians, and contractors to fix the problems you uncover, you can certainly find that perfect deal!
We would like to thank Jeff Turner for kindly sharing today’s photo via the Creative Commons License.Email This Post To a Friend.