As I continue showing homes and condos in our current real estate market, I'm finding up 50% of the properties are listed as foreclosures or short-sales.
What does this mean to you, the buyer?
Timing, for one thing, can be widely varied.
In many foreclosures, where the lender has already purchased the home, the normal time frame from accepted offer to closing is usually 30 - 45 days. With foreclosures, you're also buying them in 'as-is' condition, even though you can have inspections to see if you still want the property. Fannie Mae also requires the buyer to pay around $125 for changing the locks through their approved contractor. Even though we're out of winter time, many properties are still winterized and lender are requiring the buyer to pay for that expense too - around $250 - $300.
In short-sale listings, nobody knows in the beginning when an actual closing can take place. I wrote an offer this weekend, where the listing agent told me that the lender may take up to 45 days before approving the short sale amount. That's not uncommon right now. It can even be longer than that too.
A 'short-sale' is where the homeowner is in a financial distress situation and in order to sell the property, must sell it for less than the outstanding mortgage that's on the property. The homeowner must show that they don't have the ability to continue paying the mortgage or that they don't have the assets necessary to cover the difference between a sale price and mortgage amount.
So, if you don't have a lot of time to make a move, most short-sale properties are not going to work for you. The other thing is you're in limbo from looking at other homes, because you have a signed agreement with the seller that is subject to the lender approving the short-sale amount.
Now is a great time for home buyers to invest in real estate, because interest rates are good and housing inventory is high.
But do be aware that there are sometimes price points of properties, where the inventory is low and it may be tougher to negotiate if you get in a multiple offer situation. I've had that happen twice in the past couple of weeks. With many homes in foreclosure or short-sale situations, they are usually not in very good condition and will take some TLC & cash on your part to fix up.
If you have any questions on these types of properties, give me a call or drop me an email.
At your service, Dan
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