SLC Foreclosures

Below is great information on foreclosures including some of the best ways to buy a foreclosed home. I provide free foreclosure listings by email. This free service sends you foreclosures the day they come on the market. These listings are the real deal and include all information including addresses. It is a great way to learn the market and to stay on top of the best deals! Be sure to indicate you are requesting foreclosures in the form.

The 4 Ways to Buy a Foreclosure

5 Tips For Buying a Foreclosed Home

Thinking of Buying a Short Sale?

The 4 Ways to Buy a Foreclosure

The current market offers a smorgasbord of deals for the buyer with money to put down, good credit, and patience. For first time homebuyers or those struggling with down payment and credit issues, your best bet is still going to be going FHA with a normal seller situation. But for those with something to bring to the table, there is plenty to choose from. Below is a sampling of the types of deals available and the benefits and risks of each.

REO
REO stands for Real Estate Owned property and it is property that is owned by the bank. REOs are properties that have already been through the foreclosure process, to the auction, and are now offered back on the market. Banks will hire REO specific real estate agents to help them sell these properties.

Pros
Often can get a good price below market value. Banks want to close quick on these properties to get them off their books.

Cons
The homes can be trashed and banks want you to sign an "as is" addendum so you get no warranties.

Short Sale
Short Sales are properties where the seller owes more than the property is worth. Instead of bringing money to the closing table in order to get out from under the property, the seller may be able to sell the home "short" or for less than it is worth. This is where the buyer comes in and picks the home up at a discount often at 70%-80% of market value. The key here is getting the bank to agree.

Pros
Below market value.

Cons
These things can take forever. The bank is not excited about taking a loss and is in no hurry to accept offers and close. That is why it is imperative that the agents on both sides of the transaction prepare the paperwork as meticoulously as possible to encourage the mitigation companies at the banks to accept the offers and close.

The Auction
You buy at the auction when a trustee fulfills his legal duty as part of the foreclosure process and offers the property for sale at a public auction to the highest bidder. This can be a quick way to get a great deal. But I would not do it alone the first time. I recommend Vestus.com for help with this.

Pros
Quick way to get a good deal on the property. Also a clean way to get title since all junior lien holders lose all interest to the property when it is sold at the auction

Cons
There is high risk here because you don't get time to do your due diligence. Make sure you know what you are buying before you go to the auction and start making bids

Pre-Foreclosure
In a pre-foreclosure deal, you negotiate directly with the seller to purchase the property from them before the property is foreclosed on them at the auction. The seller will need enough equity in the home to make this kind of deal work.

Pros
The seller gets out from a home they can not afford. Able to inspect property prior to purchase. Flexibility on terms.

Cons
Can take a lot of legwork on the investors/buyers side to find the right buyer. People who are having problems making payments are constantly contacted by buyers looking for a pre-foreclosure deal.

If you need help getting started, contact me and point you in the right direction. Or if you are ready to go and want lists of short sale and/or REO properties fill out this form and indicate they type of property you are looking for. Thanks for reading!

5 Tips For Buying a Foreclosed Home

After turning on the T.V. this week I felt like grabbing all my money and heading for the hills. But when the dusts settles a little bit and the panic recedes, there is going to be a ton of opportunity. And a perfect example is REOs or Bank Owned Homes. As you can see in an article recent article on defaults in Utah, bank owned homes are expected to rise soon here in Utah. So here are 5 tips to help you make the best of the market.

1) Know Your Seller
Banks tend to become habitual in the way they sell homes. With a savvy agent you can research the seller and see some trends. Does this seller always do 30 day price reductions? If the answer is yes, then maybe you want to wait a few more days until the next price reduction before you put in an offer.

2) Sell Your Home
Banks are not going to want to wait around while you sell your home. They are losing money every day they have the home on their books because of costs associated with "carrying" the home or carry costs. These costs can be quite high and they include things like maintaining the property, paying attorneys, and paying interest on money owed. The main reason they will let the property go at a discount is so they can avoid these fees. This purpose is defeated if they have to wait around for you to sell your home.

3) Get To Know a Contractor
It is highly likely that your home is going to need some work. The bank likely did some minimal repairs to put the home on the market but it may take more to make it livable. Remember that this home was foreclosed on and the last people to live there were probably not too happy on their way out. Anticipate doing at least some minor repairs like new carpet and paint

3) Don't Forget to Negotiate
Just because they are a bank owned home does not mean that the banks will not negotiate. They are a seller just like any other. And sometimes they are more motivated than most sellers. In fact, many markets in the U.S. are currently "REO Driven" where REOS are the ones selling and are the price setters. So don't hesitate to throw in a low ball offer. Just don't make it so low that you end up wasting everyone's time.

4) Make it a Clean Offer
The cleaner the offer the better. You can still do an inspection and have the property contingent on financing, but be careful to add too many contingencies. Also, offer at least 1% of the purchase price for earnest money and be flexible on settlement dates.

5) Get Set Up With a Just Listed Auto Email
Since many of these properties are going to sell quick, you want to be the first to know about them. Click here and indicate that you are looking for foreclosures and the area you are interested in. then you will get homes emailed to you the day they come on the market.

Thinking of Buying a Short Sale?

Recently I have had a few buyers that I am working with asking to see foreclosures and short sale homes. They are looking online and attracted to these home because of the low list price. In this case, the list price should not be considered the price the house will sell for.

A short sale is a sale that happens when the homeowner owes more than what the home is worth and the bank agrees to sell the home “short” for less than the owed amount. Sounds simple in theory but in practice the process is cloudy and drawn out. Unless you are a seasoned real estate investor with nothing but time on your hands, I would not waste your time with them. And here are four reasons why:

1) List Price Not Reflective of Price Bank Will Accept

Often times, an agent will advertise the home as a possible short sale without first talking with the bank to determine whether or not they will take less than they are owed. The list price is bait trying to attract buyers for the agent's business. This destructive practice by agents confuses buyers and distracts from other legitimate sellers in the neighborhood.

2) Waiting and Waiting

Everything sounds great until now. But now you wait and wait and wait. Waiting to hear anything from the bank. The common reason given is that the bank is busy. But another answer given by Frank Llosa makes more sense. He says the bank will tell the homeowner they will accept the short sale if they continue to make payments. Then the bank lets the home be foreclosed on while it continues to bring cash in from the seller.

3) No Warranty.

You also learn that you are buying the house “as is” and there will be no warranty. That means your typical 10.2 warranty that insures the home major systems will be in good working order is absent. So forget about asking the seller for repairs and the normal inspections process.

4) Odds are Against You

According to the WFRMLS, there are currently 112 active short sale listings. But in the last 6 months only 25 have sold. That means there are only 4.16 short sale homes selling per month in Salt Lake County. That is a about a 4% chance your deal will close.

SLC Foreclosures

Mark Alder