Bank Owned Homes and Short Sales - a PrimerClick Here to request a list of bank owned homes that meet your criteria!
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In these difficult economic times the real estate market is flooded with homes owned by people who are upside down in their mortgage or in other financial distress and have to sell their home or otherwise rid themselves of their mortgage payment.
A short sale is when the owner of the house owes more to their lender than the house is worth. The owner probably bought the home at the height of the seller's market and the value has since gone down, sometimes as much as 20% or more. In this situation the bank has to consider whether to accept a "short" payoff at closing, or whether to just take the property to foreclosure and then sell the home as a bank owned home (also known as REO - real estate owned). The bank has a three stage process for considering and approving a short sale, and that plus the enormous volume of such applications is why they take so long to process and approve them, if they approve it at all. From the time a bank receives a short sale application with a purchase agreement from the seller to the time that the house goes to settlement is generally 90 days, and sometimes much longer. Here are the steps in the short sale process: First: The owner of the home has to be in true distress in that they MUST sell the home and they are unable to keep up their payments (loss of job, transfer, illness, death of employed spouse, etc.). Also, the owner of the home has to be otherwise destitute and without assets to pay off the shortage (no savings or stock portfolio to use). The bank won't approve a short sale if they determine that the owner just wants to get out from under heavy payments - why should the bank, and ultimately the US Citizenry, have to pay for a homeowners general discomfort?
Second: The bank has to establish it's own value for the property so that they know what they are willing to accept on a short sale. The bank will send an appraiser to the property and establish a reasonable value for the home in the current market conditions.
Third: The bank will then finally consider the offer that has been made on the home by a ready, willing and able buyer. If the offer is way below the value the bank established in step two, the bank can reject or counter the offer.
Homes that are sold subject to a short sale are almost always sold "AS IS", subject to a satisfactory inspection by the buyer. The bank rarely agrees to pay closing costs, and it has already been established that the owner does not have the assets or equity to do so.
Short sales are not really the great deals that people think they are. Bank's won't even start the short sale process until the seller has an offer/contract in hand. Real estate agents will often list these homes at a price below what the bank will actually accept just so that they will generate an offer quickly and can get the bank's attention with their seller's short sale application. The seller can accept ANYTHING from a buyer subject to bank approval just to get the application submitted. In step 3, above, the seller and their agent will learn what the bank will actually accept and can adjust their list price if necessary.
When the owner's loan becomes severely delinquent and they have been unable to sell their home, their lender will generally initiate foreclosure proceedings and sell the home at public auction. The bank is usually the first bidder at the auction, bidding the amount that is owed to the bank. If anyone at the auction bids even $1 over the bank's bid, the home is sold at auction and the bank never has to take possession of the property. If, however, no one present over-bids the bank, then the bank takes ownership of the home and it becomes real estate owned, or REO. At this point the bank will clean out the house and put it up for sale through a real estate professional. This is all a simplification of a very complicated, complex process, and a buyer interested in pursuing buying either a short sale or a bank owned home really needs professional advice and guidance through the process. Maggi Davis is that professional who is experienced in all aspects of buying distressed property. To help you get started, Maggi Davis can create a custom list of such homes and send to you by email for free. If you would like a list of homes in short sale or bank owned, please fill out the form at the bottom of this page telling her what city or cities interest you, your price range, etc. Within 24 hours Maggi will send you, by email, a list of bank owned homesthat meet your criteria. |
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Click Here to request a list of bank owned homes that meet your criteria! |
