Any dedicated bargain hunter who scours the Long Island listings is not surprised to find among the most deeply discounted entries one of two notations: foreclosure or short sale.
Everyone knows what the “foreclosure” designation means—it’s been repossessed by the bank. It’s an REO (real estate owned). By discounting the asking price, the lending entity invites buyers to take the property off its books. It is here that the economists’ favorite acronym, “TANSTAAFL” (There Ain’t No Such Thing As A Free Lunch), comes into play. Foreclosed properties have frequently been neglected by their previous owners, who are not happy campers. So the cost of rehabilitation must be factored in before any offer is made. Still, foreclosures can represent real opportunities for buyers with patience and determination.
Slightly different are foreclosures’ first cousins: Long Island’s short sale listings. There are any number of unforeseen circumstances that can cause an owner to fall into financial distress, but when their home has to be repossessed, the impact on the borrower’s credit is immediate and drastic. It can make finding a new place to live difficult, and can even make future employers hesitate to hire someone whose record includes that kind of hefty unpaid debt.
Hungtington properties which fall in the “short sale” category are those in which the borrower has been unable to keep up with the mortgage payments, but who is arranging for the lender to agree to accept a payoff that’s less than the full amount owed. When a short sale is finalized, the result is still some damage to the original borrower’s credit, but less than had a foreclosure proceeded. The buyer will benefit from what should be a substantially lower price than a comparable Suffolk County property would bring—and a home that is usually in better condition. An eager lender can also sometimes offer favorable financing terms, too.
But remembering what the economists say about TANSTAAFL, there are also these points to keep in mind:
- Short sales involve extra bureaucratic red tape. The fine print includes items such as the lender having to approve details of the sale—and that can result in nerve-racking delays.
- Although the owner is usually trying to keep a short sale property in good shape to facilitate the deal, banks won’t allow a short sale until the borrower has seriously fallen behind in payments. That can mean an inability to keep up with the expense of proper maintenance. As in a foreclosure, canny short sale buyers make certain they know the cost of rehabilitation.
- The possibility of sticky legal issues needs to be recognized. For instance, if the seller has filed for bankruptcy, it could squelch the whole deal. Negotiating a short sale can be considered a “collection activity”—and those aren’t allowed in most bankruptcy courts.
If one of Huntington’s foreclosure or short sale-denoted listings has grabbed your attention, I can help. It will require attending to some technical issues attached to the specific property—but I’ll be pleased to help you navigate the process from beginning to end!
Thanks again for tuning in!
For more information, or if you would like to speak with a Core Real Estate Advisor you may call (844) 211-5053 or send an email to email@example.com. You may also visit our website at www.corelisted.com
If you are require an immediate offer or you need help negotiating a short sale, for no obligation or fees contact our subsidiary company ParkCity at (844) 211-5053 or (917) 525-3516 you can also check the website at www.callparkcity.com
Anthony Manzolillo is the Principal Broker for Core Real Estate Advisors, Inc. Core has agents specializing in both Residential and Commercial properties. Anthony Manzolillo started his career in real estate working for a private equity firm. In his role as the Director of Acquisitions, Anthony has been involved in acquiring over 50 multi-family properties worth over 300MM. He has been the lead agent for helping lenders such as Bank of America, JP Morgan Chase, Country Wide, Litton Loans, Green-Tree, and Compass Bank dispose of hundreds of distressed properties. Anthony’s most recent accomplishment is working as a consultant for NY Rising and GOSR, whereby he was directly involved in the acquisition of over 600 homes substantially damaged by Hurricane Sandy.