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Search for Bargain Properties Made Easier
As a sign of the times, our Regional Multiple Listing Service (RMLS) is adding a “bank owned” field to its listing search engine. This will allow Realtors to search exclusively for foreclosures when scouring listings for clients.
Foreclosure Terminology
Speaking to some of my buyer clients, I’ve discovered that there is a little confusion about terminology relating to foreclosures. Let me try to clear up some of the confusion.
Pre-Foreclosure and Short Sales
First up is pre-foreclosure. This is when a home-owner has missed some house payments and the bank has sent them a “notice of default” (NOD). Foreclosure is looming on the horizon but has not yet happened. At this point, it might be in the home-owners best interest to sell the property before a foreclosure ends up on their credit history. If the house is no longer worth the amount of money that is owed on the property, the bank might be willing to let the property sell for less than they are owed in order to forego the costs they would incur during foreclosure. This is called a “short sale” because the bank will be receiving less money than they loaned on the property. They’re coming up short on their loan.
Post-Foreclosure and REOs
If the property doesn’t sell during the pre-foreclosure period or if the owners simply walk away, the property will go through foreclosure and ownership will change hands with the bank gaining title to and possession of property. The former owners would have to vacate the property and the home would become a foreclosure or an REO (real estate owned). At this point the bank would try to sell the property which is now classified as a foreclosure, an REO or a bank-owned property. The bank has two options at this point: the “foreclosure sale” (see below) and selling the property on the open market.
The Foreclosure Sale
Great deals can be had at actual foreclosure sales. Once a bank forecloses on a property, they actually hold a foreclosure sale on the courthouse steps. This is where the bank tries to sell the property is sold for the amount of the indebtedness. This can be less or even far less, than the market value of the property. But these sales are not for the faint of heart; cash only, no inspections, just close your eyes and bite the bullet.
What all this means is that there is a way to get a deal either prior to foreclosure as well as after. The processes are different and there are different elements of the transaction to consider in both situations. This is where a Realtor comes in handy.
Your First Step
If you’re interested in searching for short sales or foreclosures, contact your Realtor (hopefully, that’s me) and have a listing search set up. With a listing search, you’ll receive a daily e-mail with a link to all of the new listings as well as listings with price reductions that meet your criteria. Setting up such a search is a snap for me, and I’m more than happy to do it.
In addition to searching exclusively for foreclosures and short sales, these searches can include a wide variety of other search criteria. Typically, I create these searches using parameters relating to price, square footage, year built, number of bedrooms and bathrooms, garage space and neighborhood. I can, however, get pretty specific with the parameters, limiting the results to properties with a specific type of fireplace; certain type of siding; or whether or not there is a master suite, for example.
Give me a call if you’re interested in keeping an eye out for a steal of a deal. I’m happy to oblige.
-Ron-
