"I want to buy a short sale or foreclosure property in Orange County." "I am in the market for an Orange County REO or bank owned property." "Can you help me buy a distressed property in Orange County?" I hear these statements all the time from buyers. When I ask why, I usually hear the same answer. I want a good deal. Buyers assume the best deals are short sales or foreclosed properties. This perception is primarily caused by the listing prices for short sales and foreclosed properties which are usually below market comparables. So the real question is, "are short sales and foreclosed properties good deals?" There is no one answer to this question. You have to analyze each individual property to determine its value. First, the list price is often not the sell price. Lenders are not going to give properties away. In the case of a short sale, just because the seller accepts your offer at the asking price, the lender will not approve the deal if it is below the lender's estimated value. With bank owned properties, list prices are often low to attract bidding wars. Buyers are often disappointed to offer full asking price on a REO and not get the property. In addition to the list price versus sell price issues there are the property defect issues. With most short sale and foreclosure properties there is a significant amount of deferred maintenance. The cost of these repairs (which are usually borne by the buyer) need to be estimated and factored into the ‘good deal' equation. If the repair costs are significant enough they could effect the property appraisal and rather the property can be financed. In conclusion, buyers should consider all properties including equity, short sales and foreclosed properties in their search. The decision to purchase a ‘good deal' needs to include a complete analysis of comparable prices and estimated cost of repairs. Good deals are available but normally sell quickly. You need to search daily and be prepared to act. Make sure you are receiving daily short sales and foreclosure properties updates. Sign up for a free daily email of all homes for sale in Orange County including short sale and foreclosure properties.
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