What is a Foreclosure Property?
A foreclosure property is a home in foreclosure — when a notice of default has been filed in the public records. It means the owner has stopped making mortgage payments and the lender has given notice that unless the payments are brought up to date, the bank will sell the property to the highest bidder. A foreclosure property may also be referred to as an REO – Real Estate Owned.
Foreclosures are usually easier to deal with than short sales, because there is one decision maker (the bank) and response times are more prompt. In a foreclosure sale – the bank already owns the property and takes the place of a seller. Foreclosures may be a good deal, but in many cases, the home has been neglected and is inpoor condition. What this means to the buyer are many unforeseen costs to make repairs to the property. These repairs could be minor and cosmetic, or they could be years of neglect that will put a heavy price tag on repairs.
The benefit: the price is usually more competitive and allows room for these repairs. The banks typically do not credit for repairs or complete any of the repairs themselves so the buyer should have means to do so after close of escrow.
When looking at a bank owned home, Nadia will suggest that you take a few things into consideration before making an offer on the property, such as:
- Are you able to afford the cost of repairs and maintenance the home will need, in addition to paying your monthly mortgage?
- Do you have a realistic idea of what the repairs will cost?
- If needed: does your schedule allow for the time to take on a large project?
- Will these specific repairs hinder your appraisal and will they need to be completed before close of escrow?
Nadia Colucci believes it is important for her to work hand – in – hand with the buyer’s lender to ensure they are protected through the whole process and that their money is not put at risk. Most foreclosures offer a great opportunity for investments and for buyer’s to get into the Real Estate market. Nadia will effectively negotiate your offer and guide you to understand what the banks are looking for. While REO’s make for a great investment opportunity – a lot of times you can find a home in better condition and similar in all other features as a traditional, resale home.
What is a Short Sale Property?
A short sale occurs when a home owner is in foreclosure but before the property goes to public auction. Under a short sale, a lender must agree to accept less than the amount that is owed on the property. Unlike a foreclosure, investors typically buy the home for even less because investors are not paying off the existing loan nor making up the back payments. Investors are striking a deal with the existing lender to take less than what the lender has coming to avoid dealing with a foreclosure.
Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, find out if the home is a short sale. You might want to think twice about making an offer on a pre-foreclosure, short sale home. It’s not as simple as you may believe.A “short sale” should really be called a “long sale” since there is nothing short about it. It can be a lengthy and frustrating process, and most of the time a buyer will have to make several offers on homes before they end up purchasing one.
Many home buyers have waited 4 to 6 months to close on a short sale, sometimes longer.
In some real estate markets, fewer than 1 in 10 short sales close. Just because that home is listed as a short sale doesn’t mean it’s really for sale (because it’s subject to lender approval), nor does it mean it will sell at the advertised price.
Most often, short sales are not as good of a deal as you think. In many cases, a short sale will receive multiple offers, therefore, making the home sell for a higher price than its original list price.
Here’s how it generally works:
- When a short sale home first comes on the market, the first offer will most likely be a tad below list price.
- The second, at list price.
- The third offer will be slightly higher, maybe by a $1,000 or $2,000.
- The fourth offer will be significantly more.
When working with Nadia Colucci, she will prepare you for all the issues that could arise during the short sale process and make sure you have a good understanding of what you are purchasing. Here are a few things to keep in mind when deciding to make an offer on a short sale:
- Lenders ask buyers to purchase the home in its present condition-Homes Sell “As Is”
- Higher costs to the buyer-Lenders typically will refuse to pay for:
- Suggested repairs disclosed on a home inspection.
- Pest inspections or work necessary to issue a clear pest report.
- Roof certifications or roof repairs.
- Home protection plans for the buyer.
- Deferred maintenance.
- Lenders can change conditions
- Some lenders reserve the right to renegotiate the terms of the short sale at the last minute. If the market changes, new laws pass or new information crosses the lender’s desk, the lender can attempt to change the terms of the contract. Lenders generally have lawyers at their disposal, and ordinarily buyers do not
When making the decision to purchase or sell your home as a short sale, it is important to have someone that understands the ins and outs of this process. Nadia is an expert in short sales and foreclosures. She will look at each property and ask the right questions to know if that specific property is worth making on offer on, or if selling as a short sale is the right choice for you and your situation. When dealing with buyers, she recommends that if you are going to make one offer on a short sale, you might as well make an offer on 10 because those are usually the odds. If you are a seller, she will guide you in dealing with your lender, tax accountant, and the best way to ensure a smooth transaction.
