Tag Archive | short sale properties

The difference between short sales, foreclosures, and resale homes for sale

ImageAre you wondering what is the difference between  Foreclosures, Short Sales  & Resale Homes For Sale?

Foreclosures- Take on a variety of types also termed Bank properties or REO real estate owned, this means a borrower has failed to make payments and the mortgage company has taken the property back.  In some states a borrower has the right to redeem their property before it is sold to a new buyer (such as in VA) and some states allow a borrower to come back after a foreclosure sale to redeem their property.   Depending what state you are in find out the rules………… Bank Properties/Foreclosures can be sold in a variety of ways from on the court house steps, through auctions, through online bidding, or thru brokers in the MLS (multiple listing service).  Usually in most cases the property is to be sold as is with no disclosures.

ImageShort Sales- A current owner needs to sale there home but owes more on their current loan balance then the property is worth. They negotiate a deal with bank to sell the home for less than they owe.  The difference between the current loan balance and the new excepted price is called a deficient amount.  The bank can agree to wave the deficient amount or depending on a owners assets the bank can ask for a deficiency judgment.  This is usually a negotiated amount between Owner and Bank for lower than deficient amount.  For buyers this can give you a chance to buy a home you normally could not afford.  But becareful of teaser sales prices-often agents price short sales low to attract an offer.  A Bank usually wants a fair percentage based off current market value.  If you need closing cost assistance this may end up being a hurdle because there is NO equity in the home so if the bank says No and seller can’t pay it- your deal will be in the toilet…………

ImageResale homes means a current real person seller exist.  This seller can occupy the home or not occupy the home.  It can be an investor or Flipper or a regular owner.

Be careful of flipped homes – just because it is remodeled does not mean it has been done correctly.  Resale homes giv the buyer a chance to negotiate the small stuff, closing cost, repairs, home inspections, closing periods, Home Owners association or condo paperwork, or posession agreements.  These little things often call contingencies and are usually not allowed in the negotiations for foreclosures and can be limited in short sale transactions.

Your loan type can dictate which properties you can choose from.  Certain loans must meet minimum property standards for the lender to give the money.  If you do not know which route you should look at give me a call and I can help guide you thru the process.

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Norfolk, Va Are you ready for Virginia’s Evolving Foreclosure Crisis!

I drove from Chesapeake, VA to Isle of Wight, VA yesterday and I have never seen such an abundance of for sale signs. There were signs from real estate companies I have never heard of and as I drove up and back I wondered How are these agents holding up and are they prepared for this 2011 market?

Realty Trac and H.O.M.E. Housing Opportunities made Equal put out a report on Virginia’s Evolving Foreclosure Problem. At first glance I realized the study was heavily weighted on Northern Virginia Rural vs Urban areas but as I kept reading it became clear that even Southern Virginia is not safe from this foreclosure crisis.

I have been an agent for 15 years licensed in three states and I have seen my share of up and down markets. And as the saying goes “And this to shall pass”!!!! But the question after reading this report is “WHEN and ARE YOU READY.”

The Key findings of the report are informational but slightly disturbing:

•In 2010, the largest increase in foreclosure filings occurred in rural Virginia (Do they mean Rural not big city Urban like Hampton Roads ) Rural is defined as less than 500 people per sq mile.

•Foreclosure filings eased slightly at the end of 2010, mostly because of moratoriums from large national lenders so they could sort out mortgage servicing issues.

But Without these moratoriums that were put in place, Virginia would have seen the largest number of foreclosure filings since the beginning of the Great Recession. That says a lot are they serious?

•Since 2006, there have been over 200,000 foreclosure filings in Virginia and more than 60,000 in 2010 alone. (I could tell this was a problem by the increase in REO, Bank foreclosure inventory in the MLS in 2009 to 2010.)

•Foreclosure rates in rural areas have nearly doubled since 2008, while rates in urban areas have remained fairly consistent because of moratoriums and short-sale approvals. (Rural vs Urban)

•High foreclosure volume has revealed some significant mortgage servicing issues. A survey of housing counselors has found significant servicing issues statewide. (Deed of Trust, Note, and recording issues)

•In 2009, nearly four out of every five mortgage loans were sold to an investor -the highest rate since at least 2004. Since 2004, more than sixty percent of mortgage loans have been sold to an investor within one year of origination.

-This further complicates the mortgage recordation process and may create mortgage servicing issues in the future that may lead to more faulty foreclosures.

So ok if these are the findings it is probably safe to say. That Southern Virginia sellers, buyers, agents, and the whole community is not safe from the evolving foreclosure crisis.

The report states that in 2006 and initial wave of foreclosures started because of inflated home sales. The next wave was fueled by high cost loans given to low income and minority communities. We also saw a host of exotic subprime loans, interest only, jumbos, stated income, etc.. take its toll on the market,. Now in 2011 we will face ARMs that will linger and keep resetting throughout 2011, foreclosures from the loan modifications that didn’t/t work, and a wealth of other foreclosures.

To my fellow agents are you prepared. Have you brushed up on your short sale and foreclosure skills? Can you help a buyer identify a good deal from junk inventory and what best fits their needs ie; mortgage and loan requirement, criteria, area preference, etc…..Buyers you have to live somewhere, why are you not taking advantage of the super low interest rates and abundance of good houses for sale? Agents can you tell a seller were he can go get legal advice. Agents should never give legal advice. Are you familiar with free home counseling programs such as The Virginia Association of Housing Counselors, the Center for Housing Leadership, and the handful of knowledgeable real estate attorneys that really truly work on a buyers behalf? Are you a self deemed short sale guru and or a savvy REO, bank property expert. Sellers are you ready to do what it takes to sell, Patience and Performance. And if you can’t wait do you have a plan B, C.

If you answered NO, then you should be prepared. Up into now you could avoid it rather easily. Agents often could focus on some other avenue of real estate, property management, new construction, etc… but as the report states; Foreclosures have now trickled down to every crevice and corner in Virginia. North, South, East, and West, Urban, and Rural. Rather you work with sellers or buyers you will sooner or later be affected. It is amazing if you go in to a restaurant you may over hear a conversation on a short sale or foreclosure situation, someone in your family may be or you may know someone going thru or coming out of a short sale or foreclosure situation.

If you answered yes are you prepared for what the future might hold. Are you looking ahead long term? What will happen in 5-7 years when a large part of the population will now have a history of a foreclosure or shortsales on their credit? And lenders may or may not loosen the credit criteria. Will we have to fight for ready, willing, and able buyers? What happens when the babyboomers do-ing reverse mortgages die off? How will that effect inventory? What happens when these loan modifications come to an end? Will we see even more foreclosures? I say Just be prepared for it all, But don’t put your blinders on we are in for a lot of change, its going to happen. Can you stay grounded, positive, and educated? Are you Ready?

If you are in Hampton Roads, Southern Virginia Cities: Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, Smithfield, Suffolk, Williamsburg, York County. Join the Group, http://activerain.com/groups/hamptonroads

“I can dream alone, build alone and strive alone, but true success always requires the help and support of others. Please send me your referrals.”

Visit my website today, The Hampton Roads Real Estate Lady!

Deandrea “Dee Dee” Jones djoneshomes@gmail.com

Associate Broker Wainwright Real Estate Virginia Beach, VA

Certified Real Estate Instructor Millennium School Of Real Estate

http://DJonesRealEstate.com