Wow! What an interesting year in the real estate market. This year the real estate market is being inundated with bank owned and pre-foreclosures. I am finding my clients calling and asking many questions about this subject.
First, many people want to know why there are so many people foreclosing. Well, of course there could be many reasons, but at the top of the list are the many people who have re-financed or purchased with adjustable rate mortgages, who now cannot make the payments at a higher interest rate, or when the economy saw its better days, simply used too much credit thinking things would stay the way they were, and now with gas, groceries and everything else being inflated, cannot repay their debts, including their mortgage. Many people behind in their payments do not realize that they can still avoid foreclosure before it is too late. It is a very unfortunate thing for someone to lose their home, but can become a profitable investment for a buyer looking to take advantage of the banks' burdens.
The second most asked question would have to be, "What is a short sale?" A short sale is a sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Purchasing a short sale can be a lengthy process, taking sometimes 6 months or longer, especially if the short sale is not already approved by the bank when the property is listed. However, the sellers credit is not as scarred as if they had foreclosed, and many lenders will forgive the remaining balance on the mortgage by accepting the proceeds of the sale as satisfactory payment.
The benefits of buying foreclosed homes are about to get even better thanks to the $15 billion Foreclosure Prevention Act of 2008. Homebuyers and investors can soon take advantage of a $7,000 one-year tax credit with the purchase of foreclosure properties if the legislation is passed.
That's a huge savings on top of already discounted real estate. In fact, foreclosed homes are often listed between 30 to 50 percent less than market value.
Another thing that is becoming a trend is auctions. Some listings agents representing the banks are selling the foreclosures at auction. There are deals to be made here, however, a hefty cashiers check is expected to join in the bidding.
There are many things to know when buying a foreclosed property. Too much for this poor blog to handle. I have been HUD certified since 2000, and have had my share of foreclosure experience. The market was very similar when I got in to real estate in the late 90's, but this year, I believe, takes the cake for me!
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