A Buyer's Guide to the Right "Type" of Purchase

By
Real Estate Broker/Owner with Cornerstone Business Group Inc 0225086119
http://activerain.com/droplet/gPf

First-time home-buyers are just that, first time buyers.  Because of that, there can be an assumption that they are not sophisticated enough to purchase anything other than fair market property, but is that true?  I try to make sure my first-timers have as much information about fair market, foreclosure and short sale properties as possible to make a well informed property decision.  Actually, I use the same information for all buyers.  I try to keep it simple, and it looks something like this:

 

Fair Market Sales

  • Typically the easiest to find, finance and closeA Buyer's Guide to the Right Home
  • Not always the easiest to negotiate
  • Can tend to be overpriced, but not always.  Can be negotiated with many sellers
  • Most Realtors are well versed in the fair market process
  • Properties are often not vacant
  • Owner impact on the property will be more obvious
  • Owner may be willing to make repairs
  • Owner may be willing to add closing costs

 

Foreclosures

  • Easy to find in today's market
  • Financing may be hindered by property condition - may require a renovation loan
  • May be damaged by previous owner - or may need more repairs due to previous owner's inability to keep the property up during their financial struggle
  • REO companies do not like to do repairs - normally sold "as is" - may do system repairs due to necessity
  • Prices tend to be lower because it's a foreclosureForeclosures in Winchester Virginia
  • More room for price negotiation than short sales
  • Closing is about the same as Fair Market once a contract is ratified
  • REO companies may be willing to add closing costs
  • REO companies want things to move swiftly once the contract is ratified - they don't like contingencies
  • Buyer may be subject to per Diem fees if he/she is responsible for a delayed closing
  • Not all Realtors are familiar with the REO process, but it is easier to learn on the job

 

Short Sales

  • Easy to find in the current market
  • Listing price may not have been approved by the lender prior to listing
  • Will require more time to secure contract acceptance and ratification - can be as long as 3-6 months, and beyond.  There are signs that banks are finally accepting the inevitable and are processing short sales more quickly.
  • Just because a seller says yes to a purchase offer doesn't mean that the buyer has a good contract.  The third party may not accept the buyer's offer.  Then Buying a Short Sale in Winchester VAagain, the third party may counter the offer.
  • The buyer cannot fall in love with the property.  There are numerous things that can go wrong.  Advise the buyer not to fall in love with anything that can't love him/her back.
  • Financing is similar to fair market financing
  • If the buyer has the time, patience and money to buy, it can be a great option.  Many short sales are equal to and/or lower than foreclosure prices.
  • Not a good choice if time is a factor
  • Houses tend to be in better condition
  • The short sale company will almost never do repairs.
  • Short sale companies do not like any contingencies
  • Short sale companies almost never offer closing costs
  • Short sale companies may try to change the rules at the last minute affecting Realtor compensation and seller contributions to the sale
  • Not always vacant
  • Not all Realtors are familiar with the short sale process - this can hinder the entire process

 

All three types of purchase should be considered when looking at homes for any, and all buyers.  The buyer's circumstances may be more of a consideration than the type of home purchased.

 

close

Re-Blogged 7 times:

Re-Blogged By Re-Blogged At
  1. Michael Collins 08/16/2011 04:59 AM
  2. Don MacLean 08/16/2011 07:23 AM
  3. Howard Weiss 08/16/2011 07:27 AM
  4. Melissa Brown 08/17/2011 06:43 AM
  5. Gene Riemenschneider 08/18/2011 06:38 AM
  6. Beverly Femia 08/21/2011 04:59 AM
  7. Dale Taylor 08/26/2011 08:27 PM
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Tags:
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Rainmaker
877,392
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post and clarification on the different "types" of purchases.  These days, it's all about managing expectations of our buyers more than ever!  I'd also add that we're seeing foreclosures wherein Fannie &/or Freddie have totally painted, carpeted, and made spotlessly clean - demand full price or better.  Interesting twist on foreclosures!

Aug 17, 2011 07:15 AM #42
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Jan, Fannie is doing that in this area too.  Interesting!!

 

Aug 17, 2011 08:06 AM #43
Rainmaker
636,106
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas
Great job here, Mike! I like how you bullet pointed all the facts as it makes it easy to see the difference this way. I agree with you in that the buyer's circumstances may be more of a determining factor than the type home. Have a great day!
Aug 17, 2011 08:31 AM #44
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Thanks, Dee Dee.  Glad you liked it!!

Aug 17, 2011 08:32 AM #45
Rainer
335,245
Kate Akerly
Halstead Property - Brooklyn, NY
Brooklyn Residential Sales and New Development

Great list, thanks for compiling it.  We don't have much in the way of short sales or REO's in our market, so we're always interested in learning more about them.  

Aug 17, 2011 09:16 AM #46
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Mike & Kate, count your blessing!  Thanks for dropping by!!

Aug 17, 2011 09:25 AM #47
Rainer
154,013
Deb Espinoza
Stage Presence Homes, San Diego Real Estate - Ramona, CA
GRI, Broker, SRS,ABR ePro, SFR, CNE

Great post Mike! Some great points to go over with buyers and help bring them into reality.

Aug 17, 2011 10:30 AM #48
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Great, Debbie.  Hope you can use them.

Aug 17, 2011 11:39 AM #49
Rainer
436,260
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Great post, seems like you covered most every type of transaction.

Aug 17, 2011 12:44 PM #50
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Thanks, Kimo. 

Aug 17, 2011 12:47 PM #51
Ambassador
1,063,103
Jerry Newman
Brown Realty, 210-789-4216,www.JeremiahNewman.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Mike, I can't believe this post was not featured yet. I just hit that Suggest button. This is some great information for buyers looking into the foreclosed and short sales homes.

Aug 17, 2011 01:13 PM #52
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Thanks, Jerry.  It got a of positive fedback.  I appreciate the suggest!!

Aug 17, 2011 01:17 PM #53
Rainer
247,800
Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

Great points for each type of transaction. I always let my clients know the pitfalls of short sales and try to stay away from them due to delays. It is best ot inform the client up front about the process for each so there is no misunderstandings.  

Aug 17, 2011 04:42 PM #54
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Absolutely, Gerard. 

Aug 18, 2011 12:43 AM #55
Rainmaker
1,428,654
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good post that covers a lot of ground.  I write on all three but have never done a post comparing the three types of purchase.

Aug 18, 2011 06:18 AM #56
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Great, Gene.  It's nice to look at them side by side.  At least then you can make an intelligent choice. 

Aug 18, 2011 07:23 AM #57
Rainmaker
210,735
Dale Taylor
Re/Max 10 New Lenox Illinois - Frankfort, IL
Realtor = Chicago Illinois Homes Townhomes Condos

Like what you did here!

Aug 26, 2011 08:11 PM #58
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Thanks, Dale.  Trying to keep it simple!!

Aug 27, 2011 03:47 AM #59
Rainmaker
129,617
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Very nice stuff.  I need to incorporate this into a purchase packet.

Sep 06, 2011 03:46 PM #60
Rainmaker
1,353,855
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Thanks, Mike.  You're welcome to it.

Sep 06, 2011 09:36 PM #61
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Rainmaker
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Mike Cooper

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