Short Sales and Foreclosures: Why They Are Not Always The Best Deals

Very often I'll come across someone who'll request all the foreclosed properties I have access to. It's from my years of experience that I've found foreclosures are simply not the deal they are made out to be. Not, at least, to the person who's never experienced them before. The reason this market has so many foreclosed properties is because people could not afford their homes after they got into them. The taxes went up, the adjustable rate mortgages adjusted, other expenses went up, whatever their situation was. Below is the definitions of short sales and foreclosures, then I'll discuss why they are not always the best way to go:

Short Sales: A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments.

Foreclosures: When a homeowner defaults by failing to make payments on his or her mortgage, the bank or financial institution that holds the mortgage note may foreclose on the property. Foreclosure gives the legal ownership of a property to the bank to allow the bank to recoup its investment.

For a short sale, the owner still owns the property. Some downsides of buying into either of these are…. time. It often takes the bank a long, long , long, time to decide whether or not to accept your offer. They don’t play by the same rules as a 'normal' sale. They have their own rules, and if you don’t follow theirs, then forget about that house. It could take 2 months just to hear a response as to whether or not your offer is accepted. My typical ‘normal’ offer gives the seller 1 – 2 days to respond. And if a better offer happens to come in at that time…you won’t hear about your rejection until after they accepted the other one, which again could be 2 months.

Buying and selling real estate is a very emotional journey. When dealing with a bank-owner, you are a file on their desk. You also might need to take responsibility for fines that were assessed to the home. You could have a home inspection, but know that the bank won’t likely renegotiate. And finally, foreclosures are NOT this great deal of the century that we hear they are. They are often trashed, I showed one just this week that had 3 dead mice floating in the kitchen sink….. And most of all, the bank will still try to get fair market value. Occassionally, once in a blue moon, as lightening does strike and people do win the lottery, you might come across a great deal, but the 99% majority will not be.

September Homebuyer Seminar

La Casa de Esperanza will be hosting this month's HBC Service's Homebuyer Seminar.

HBC Services is a non-profit organization which offers credit and homebuying counseling, and has various government grants available to qualifying buyers.

This month's seminar is:

Saturday
September 20, 2008
9 am - 3 pm

This is a one day class. Speakers will include a representative of HBC Services talking about credit and how to decide if buying a home is your best financial move at your current situation. I will be the guest realtor speaker and will discuss the whole homebuying costs and procedures and what to expect and when. Other guests speakers will include a mortgage lender, home inspector, and an insurance agent.

This seminar will be jam packed with educational material for whatever stage of homebuying you are in. Seminars are usually held monthly, so if this date doesn't work out for you, please check back for future dates!

To ensure you have a seat and materials, please RSVP to HBC Services: 262-522-1230. For information about HBC Services, visit their website at http://www.hbcservices.org/.