Short Sales are popping up all over the place. Everyone likes trying to get a deal in Real Estate these days.  Don’t get me wrong, there are lots of deals to be had (when you compare todays prices with those 3-4yrs ago).  In fact we are close to 2003-2004 prices!  The most common misconception about short sales, is that they’re short in process. This is far from the truth. Short sales can actually take a VERY long time.  I’ve had clients wait up to 6 months for a home only to find out the bank(s) have rejected their offer.  YIKES! 

If you’re only dealing with 1 bank, the process seems to be a lot faster than if the seller has multiple mortgages and home equity lines out on the property.  All of these banks must agree to a lesser amount than what their owed.   The more banks there are, the more time they take.  However, the good news is banks seem to be getting more realistic about pricing and condition.  I think they see the short sale market growing and they need to move fast.

As for condition of the property? Sometime they’re in good shape, other times they’re not.  It all depends on the homeowner and their financial situation.  They’re usually in better shape than an actually foreclosure.  But no guarantees anywhere.

In short, these sales can be worth a buyers time, if they’ve got it.

There has been a recent surge in buyers looking for lender owned properties. Or perhaps there are just more lender owned properties out there??  Both may be true.  What definitely is true is that people are searching for a deal.  They are looking for something they can make some instant equity on.  Don’t we all want this, regardless of the market?

Yep!  Only now, we’ve got more pots on the fire…   Looking at lender owned properties isn’t a bad thing.  I love it when people see a deal they get excited about and the race is on to put a contract in and negotiate.  However, dealing with a bank is completely different from dealing with your average home owner. There are NO emotions involved.

Here are a few things I’ve learned in dealing with lender owned properties around Cincinnati:

1. Make sure the numbers work for the bank - The bank is looking for a number of things in a buyer, but most importantly they’re looking at the numbers.  They want the most amount of money and they want to close the deal fast.  Cash and close within the week is usually preferable.  However a lot of home buyers who are looking for a deal, just aren’t able to do it.  I’ve been in multiple offers with the bank on properties and they’ll take more money over certain financing  or inspection contingencies.  As long as the buyer looks solid on paper.
2. Banks are Pricing relatively competitively right now - As far as bank pricing goes?  They’re a lot more realistic right now than seen in the past.  With the onslaught of properties that are bank  owned and the anticipation of more of them coming up, banks are becoming more realistic about price.  Its seems as though lately they’re pricing things closer to where they should be, or they’re taking regular price reductions at faster rates than before.
3. Expect Multiple offers -  Almost every lender owned deal I’ve been involved in has been in multiples… and this really upsets the buyers at times.  Contrary to popular belief, even in multiple offers banks won’t always take the highest bid.  Sometimes they reject all offers, perhpas waiting to get something better.  This sounds weird to me, but I’ve seen it happen numerous times.  If numbers don’t work for the bank and they just say no to all parties.  From my side, I don’t get it.  Isn’t it better to cut your losses early than to prolong the evadable?  Also, one of the first rules in real estate is “your first offer is always your best offer.”  Ask any seller who has been burned on this.
4. Expect to make some repairs and improvements to any of the lender owned properties you look at.  Most of the time, the copper has been stripped, the appliances have been taken and the house is really just a mess.  After all, if the previous owners couldn’t afford to keep the property, how could you expect them to afford to maintain the property?
5. Expect for the deal to take longer than normal. 
6. Make sure the deed is in the name of the bank and still not in the previous owners name.  I was just told this recently by a mortgage banker friend of mine.  Making sure this is clear will keep a lot of headaches from happening.
7. Be sure that none of the utility bills are attached to the house.  This discussion came up around the office the other day.  Someone had this issue come up with a 1700$ water bill as a lien on the house.

Thats about all I can think of right now.  I’m sure as my experience grows with these, there will be more to add to the list!

Perhaps Most of you saw this news yesterday:

Fannie Mae, Freddie Mac suspend foreclosure sales - Restriction is in place from Nov. 26 to Jan. 9

Is the government wanting to give some holiday cheer to those in need?  Are they feeling the warm fuzz of the holiday’s?  Or are they so swamped that they can’t handle the amount of paperwork that they already have?  Personally, I think its the former and not the latter.  Having worked on a few lender owned or pre-foreclosed (short sale) properties recently, i can tell you that the hole process is ridiculous.  No one bank handles them the same way and it seems as though things are always done backwards and with no consistency.  There should be a stream lined process.  Perhaps thats what they’re working towards?

My other question is what happens now that another 45 days goes by and the banks are now even further behind on getting paid? From experience a majority of home owners who know they’re getting foreclosed upon simply stop taking care of their property.  I’ve even heard of instances where owners will sell EVERYTHING in the house that they can (furnaces, cabinets, copper piping, etc) if they know they’re house is going to be taken away.  Now, its worth even less and the bank (and now the tax payers) is left picking up the pieces…  I’m not saying that every foreclosed property is like this, but 9 times out of 10 thats what I walk into…

Only time will tell.  In the end, it does make me feel warm and fuzzy that people won’t be displaced during the holiday season.  Even though the gloom of Jan 9th will be over their shoulders.

Looks like my last post about lender owned properties wasn’t too out of whack.  In today’s Business Courier of Cincinnati and according to realtytrac.com, Cincinnati foreclosure rates are up from last year.  What a surprise right??  BUT, the good news is that our rate is the lowest in the state (which ranks 8th).

Looks like everyone is wanting to get in on the action.  If you can buy now, its a GREAT time.  Rates are low and evidently there are deals to be had!  For the full report by realtytrack and to look at the pretty graph, go here and for the business courier wrap up go here.

If you want a lender owned property, just expect delays and a house that needs work.  With more and more foreclosures, the waiting time will only increase!  Happy Hunting!

There I said it.  Some people don’t like that word these days, others do. 

Yes, its true there are a lot of foreclosures out there, or a lot of houses that are on the brink of being foreclosed upon.  Is it true that EVERYONE is getting ready to get foreclosed upon?  Nope.  Ohio seems to always make the foreclosure news, but from my understanding a majority of the foreclosures are in the northern part of the state.  Cincinnati, doesn’t have as nearly as many.  For Ohio’s foreclosure rates, check out today’s article in the Cincinnati Business Courier

I had question today asking about the PRO’s, CON’s and CHALLENGES associated with purchasing foreclosures.  So lets take a look at some of these….

First of all lets define what a foreclosure is: a legal process that give the lender the right to reposess a home that the borrower was unable to pay, in order to secure their loan.

PRO - the biggest positive are the financial benefits gained by the new buyer

• Buyer is able to purchase the home at a discounted price = Instant equity in the house.
• People can purchase a home in an area they otherwise may not have been able to afford.
• If you are an investor, it may be a chance to come in, fix it up and turn around and sell it for a profit.

CON -

• Can be a SLOW process.
• Dealing with the banks can be a major headache.
• Generally foreclosures in lower price areas need more work (time, money and energy) to make them habitable.  Where, foreclosures in higher priced neighborhoods are generally in “better condition.” As one agent put it to me; “there won’t be the smell of ‘cat tink’ in the air, nor will the fish stix be left out on the counter.”
• Because the bank owns the property there will be no owner history on the house, so there can be more risk.  But if you have all the necessary inspections done, it should be okay.

CHALLENGES -

As with any real estate transaction, there will be challenges.  With a foreclosure, you need a lot of patience because anything can happen.  You are at the mercy of the bank and on their time-line.  Just like non-foreclosure properties there will be great deals and not so great deals and so you have to be willing to take the time to search through all the “rocks to find the gem.” (like going to the thrift store, right??)

For more in-depth information about the process and terminology visit this site: http://www.foreclosuredeals.com/faq.php

If you’d like for me to help you find some homes in your area, give me a call!