The Good News…
Every home that sells generates a $52,205 impact on the U.S. economy, so the more homeowners the better for our country.
Statistics also show that the number of homeowners in foreclosures is on a huge decline
Now the bad news…
Home prices are rising in most of the country and some buyers just can’t afford a decent priced home large enough for their entire family. Why is that? More and more homes are being sold each year creating a shortage of inventory or a Seller’s Market.
Here’s how to still get a good deal…
Let’s Begin with Foreclosures
•Homeowner has stopped making payments
•Lender gives notice that the payments must be brought up to date
•Lender places property on public auction
•When the Lender can’t sell it at auction, the lender places the property on the open market.
(There are no inspection and financing periods allowed at auctions making it very high risk for anyone other than experienced investors.)
By the time the foreclosure hits the open market the lender is willing to deal. Why? The bank must still pay real estate taxes, property maintenance, and some municipalities impose special fees. Not to mention the opportunity costs of having money tied up in a non-performing investment.
What Is a Short Sale?
•Same as a foreclosure…
…Except the homeowner sells the home before the public auction
•Short sale lenders must agree to accept less than the amount owed on the property
Buyers can strike a deal with the existing lender to take less then what’s owed because it’s in the lenders best interest to avoid the foreclosure process. The added expense of the foreclosure process can cost the lender as much as 40% of its original investment.
How To Navigate This Often Complicated Process
The truth is that foreclosures and short sales are priced at a steep discounts because of drama.
Foreclosures are usually in disrepair because struggling homeowners usually don’t make home maintenance a priority.
Short sales are usually in better structural condition, however some short sales will never be approved by the short sale lender. Making some of the deals a huge waste of time.
Follow These 5 Bullets to find a great deal – with confidence!
•Familiarize yourself with FHA or Conventional Rehab financing
•Familiarize yourself with the home buying process
•Hire an agent that’s familiar with these types of transaction
•Hire competent inspectors and contractors
•Focus on short sales and foreclosures that are vacant