If you are a new homebuyer looking to get into the housing market, sales may be an excellent way to find your dream home at a price you can afford. Homes that have gone into can also be a real gem for the investor who will use the property for a rental or hold onto it until the market takes a positive upward turn and he can sell it for a profit. However, is a complex process, and you need to have a decent idea of the steps involved before you are ready to take advantage of the bargains to be found. There are three different types of sales that we will cover here; foreclosures, short sales and REO's.
1 – Foreclosures
In a foreclosure, the homeowner already has had a notice of default filed against him, which has now become a matter of public record. The public records listing at your local government office or in your local newspaper are the perfect source for sales. This notice means that the lender has issued a notice to the borrower that he must bring the loan current within a period of time or the property will go to public sale. These types of sales are most frequently handled through a public auction, where people can bid below market value for a home.
2 - Short Sale
Short Sale: The sale of a home, usually by the current owner, for less than market value. This type of sale is completed after the notice of default has been issued but before the home goes to sale on the auction block. A potential buyer may approach the homeowner with the intent of purchasing the property directly from him. Short sales are a desirable type of sale for both the borrower and the lending institution because it is a less expensive way for the lending institution to settle the loan. It can also help keep the borrower's credit history clean. You can find sales at this stage through public notices, a real estate agent or a lending institution.
3 - REO's
REO stands for Real Estate Owned, and means property that is now owned by the lender. This type of sale takes place at the end of the process, and is done through the lending institution, its representative and the prospective buyer. Since banks are in the business of lending money and not in the real estate business or managing property, most institutions will be highly motivated to sell the property. A buyer can often get a bargain at this stage of the process. However, the home has probably sat vacant for some time, and may need extra work to get it back in shape. Remember, the majority of these sales is on an ‘as-is’ basis and, as the new buyer, you are responsible for all needed repairs.
Foreclosure sales can be a wonderful opportunity for new potential homeowners to find the house of their dreams at a price and payment they can afford. If you are in the market for a new home, be sure to first check out the possibilities available in sales in your area.
