Lisa Mancha
The real estate market on Cape Cod is currently flooded with incredibly low priced homes. Which as a real estate agent, I must say, it is quite exciting. First time homebuyers are now able to find properties that are easily affordable within their own community.
The challenge being, that the majority of these bargains are distressed properties such as bank owned (reo) and short sales. I know that the terms can be confusing so let me explain a bit more about the dynamics of it.
Foreclosed property is considered a distressed property because for some reason, the owners of the property have been unable to keep up with the mortgage payments and the bank has given notice that the property will be "foreclosed" on and sold at auction. If the property is not sold at auction it becomes a REO, Real Estate Owned by the lender, also known as a "bank owned".
A Short Sale is a distressed property being offered for sale by the homeowner, but at a much lower selling price than what they actually owe their lender. The seller's lender is accepting a discounted payoff to release an existing mortgage. This situation may have come about because the seller may be in default in payments and is attempting to avoid going through the foreclosure procedure, or has already been notified by the bank that foreclosure proceedings have begun. This can also occur when the seller may have lost a considerable amount of equity in the properties value and they have come to an agreement with the bank to settle out the mortgage by selling the property at a considerable discount.
In either case, many buyers are of the mindset that the best thing they can do is wait the situation out, as surely the prices will continue to drop. There is also an inclination to think that the banks are in a great hurry to offload these properties and will accept near nothing in an effort to clear it's inventory. I would like to introduce another view of the situation. In regards to the bank owned properties, the longer these properties sit on the market, the more value they lose. A bank owned property is shut down and shut up leaving it empty and vulnerable to continuing degradation to the property. It can be subjected to vandalism, moisture issues, pests, frozen pipes and so on, the list is truly endless.
I have seen many a property come onto the market in acceptable condition and within months be in need of major repairs due to the lack of attention. If you are a buyer in the market waiting to see how much more the price will drop on a specific property, know that the potential savings you are hoping to gain on a foreclosed property can quickly be eaten up with the unfolding deterioration of the vacant property.
If you are a buyer with interest in a shortsale, you may be tempted to think waiting for an eventual foreclosure would bring the home onto the market for an even further discounted sale price. You need to understand that the condition you view the property in at the time it is offered as a short sale, may not necessarily be the condition the home is made available in after foreclosure proceedings. Often times the distressing emotions of the situation can be unburdened onto the property itself by the homeowners. I have seen situations in which the home owners have removed everything within the property right down to flooring, windows, decking and even the trees in the yard. Or the utilities have been left on creating moisture issues, water damage and even septic failures. It is sad to say, but these things can and do happen and are very expensive when they occur and with a REO property most banks do not offer any sort of guarantee or incentives in regards to the condition of the property. It is a situation best described as caveat emptor, "let the buyer beware"!
My advice when looking at bank owned and short sale properties is to find a realtor whom is familiar with the process of working with bank owned and short sales that also possesses keen negotiating skills. They are worth their weight in gold. Once you have chosen an agent you feel confident with, find the property that you love and focus your strategy for further savings on the negotiations of the sales price. This strategy will help to avoid the risks of not only having the home you fall in love with fall into further degradation, but also having another savvy buyer come along and purchase the home while your waiting for a price drop.
Call me today and and see what Cape Cod bargains are out there waiting for you to take advantage!
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