Foreclosures and Short Sales
Foreclosures and short sales are a fact of life in today’s real estate market. A foreclosure means the property owner is unable to pay the mortgage and the lender takes possession and ownership of the property. A short sales means the lender has agreed to take less that the amount owed on a property and allow the property owner to sell it without realizing any proceeds from the sale.
Typically, a lender desires to recover as much of its investment as possible as quickly as possible. Foreclosed and short sale homes are often sold at a significant discount – often as much as 30%.
The steps to buy a foreclosure or short sale are complicated and, for this reason, it is best to employ a Realtor to guide you through the process. Once you have a Realtor, get pre-qualified for a mortgage. A pre-approval letter from a lender is typically required to submit an offer on a foreclosed or short sale property.
With the help of your agent, search for distressed listings. Once you have located a property in which you are interested, your agent can set up a showing. Be prepared to encounter anything from extreme repairs needed to only cosmetic repairs necessary.
Always have the home inspected. Inspections are an up-front buyer’s expense but are well worth the cost.
Upon finding a foreclosure in which you are interested, your agent can compile a comparative market analysis (CMA) or other determination of value to determine a fair price for the property.
If your agent is experienced with foreclosures or short sales, he will assist you in properly compiling the necessary paperwork to submit an offer. Expect that you may be one of many offers submitted on a property.
When purchasing a foreclosure or short sale, be prepared to deal with short deadlines and long wait periods. But with patience, you may get a terrific deal on a great property.