Hi Greg,

Here is some information about the Washington State's New Distressed Property Law HB2791 that went into effect on June 12th of this year: http://www.warealtor.org/distressed_properties/. All in all, if you have patience, buying this type of property can be a great deal. You can usually get these properties for a great price and although many do need some TLC, some are as good as new. So yes, we say it's a good idea if you find one that fits your budget and needs. Good luck!

These are all good answers! I want to stress that in Washington State, you need to be aware of the Distressed Property owners laws. These dramatically increase your liability as a Buyer, to the Seller.

Sounds goofy, I know. But you really need to be informed if you are buying in this market.

I will be happy to help if you have questions. Linda

It all depends on what you want the property to do for you. If the numbers work and fit within your investing strategy, then go for it. However, when buying something used, and slightly used, you must consider deferred maintenance.

Also, if you are going to put in an offer on a short sale, foreclosure, whatever, you ought to be pre-approved. Here in CA, banks wont look at an offer unless you are ready to go.

Lastly, if you are looking for investment opportunities, browse this site: http://www.erealtyinvestors.com

There is a lot of good information on this site, they have foreclosure listings from the East Bay Area in CA, and can help you put together a gameplan for real estate investing.

Denton Ward

Questions and Answers for Short Sale Buyers
1. Why would a Buyer consider a short sale?
Think of a short sale as a pre-foreclosure sale. You are purchasing from a very motivated seller and negotiating with a motivated lender. The seller want to sell to avoid foreclosure and the lender also wants to avoid foreclosing. Foreclosing on a property is very expensive to a lender. Thus, the Buyer of a short sale is very likely to get a very good deal on the property.
2.
How much can a Buyer save?
The savings can depend upon many factors like condition of the property, location of the property, the
motivation of the lender and seller. In my opinion a buyer normally can purchase the property about
10% below market value.
3.
But I have heard that Buyers can purchase short sales for 50 to 60 percent of value. Isn't that true?
There are rare occasions where such a deal is possible, but it is very rare. These deals are usually
discovered by savvy real estate investors and the properties are rarely exposed to the public. When
purchasing a short sale property that is listed expect a more modest, but very profitable savings.
4.
Are there any disadvantages to purchasing a short sale?
If you do not have a pressing deadline by which you must purchase, a short sale may very well be worth
the effort. There are two main issues of which the buyer should be aware: (1) The process of
accomplishing a short sale involves a lot of time. From beginning to end it can take 3-4 months on
average; (2) Even though the Seller accepts your offer, it must be approved by the Seller's lender, and it
could take 60-90 days to receive an answer on your offer.
5.
Why does a short sale take so long? What is the process?
Here is a brief overview of the process. First, the seller must list the property with a Realtor. This is
required by most lenders. Second, a buyer must be found and a contract executed between the Seller
and the Buyer. Third, the sale and purchase agreement along with the seller's financial information is
sent to the lender for review (this is called the short sale package.) Fourth, the lender orders a Broker's
Price Opinion on the property. Fifth, once conducted, received, and reviewed, the file is assigned to a
Loss Mitigation Specialist. Sixth, the LMS accepts, rejects, or counters the Buyer's offer on the property.
Seventh, the negotiation continues until it either all comes together or else falls apart. Eighth, if all
parties reach agreement the closing date is set, usually for about three weeks away.
6.
How long does the above process take?
Once a purchase and sale agreement is executed between the Seller and the Buyer the whole process
may take anywhere from 3-6 months. In today's market a Buyer can expect a response to their offer
from the lender anywhere from 2-3 months, maybe longer.
7.
How is the listing price of the property determined?
The list price is determined by the listing agent. As a Broker-associate who lists and sells a lot of short
sales I cannot emphasize enough the importance of the list price. Some listing agents will price a home too low, hoping to create a bidding war between buyers. Low offers simply are doomed to be rejected by the lender. Other agents may price the home too high and no offers are received before it is too late to save the owner from foreclosure. The key is to price the home competitively in order to attract excited buyers, and yet not so low as to fail to get the transaction approved. The listing agent must be very skillful in pricing.
8.
Does this mean that I could offer full price and still not get the property?
Exactly right. If the listing agent prices the home too Iowa buyer could easily waste three months
simply waiting for a rejection.
9.
Who exactly is the Seller, is it the owner or the lender?
The Seller is the owner of the property as in any other transaction. The lender is involved in the
transaction because the sale is subject to the lenders approval. The lender must approve the deal
because the lender must accept a "short pay" on the mortgage for the deal to work. Without the
lender's cooperation there is no deal.
10.
So, do I submit my offer to the Seller or the Lender?
Your offer is submitted to the Seller who in turn may accept it, reject it, or counter it. It is then
forwarded to the lender who also may in turn accept it, reject it, or counter it.
11.
Might I be up against other competing offers on the property?
It is possible that other offers could be accepted by the Seller as back-up contracts. Some lenders will
only deal with one offer at a time which is in your best interest. Other lenders will want to know about
all offers and will consider the merits of each offer. Being the first Buyer to have an executed offer with
the Seller does not guarantee that your offer is the one the lender will negotiate.
12.
Must a Buyer be Pre-Approved?
I recommend that Sellers only entertain offers from Buyers who are Pre-A

foreclosures and short sales are a great option. here are some pros and cons:

pros:
1. easier to find good deals. you can check out ocwen.com, hut.org or go to my blog hutdeas.com for more links to great deals.
2. potentially more savings

cons:
1. prolonged acquisition cycle
2. may need some repairs (although not all of them)

here are some more things to be ware of when buying:

Pitfalls in Rental Apartment Purchases

Pitfalls in Rental Apartment Purchases
1. Find out the remaining life span of the roof. Roof is one of the largest expenses for apartment owners. make sure it is still in good quality when purchasing a rental property. If it is not use it as a bargaining tool to low the price or ask the seller for credit to repair.

2. Make sure the laundry machine rental contract pay out is reasonable. If not make sure the contract is terminating soon. Otherwise using it as a bargaining too as well.

3. Have the property inspected by an experienced physical inspector. You may also want to order an appraisal to get a fair market value.

4. Visit the property, talk to current tenants and inspect as many units as possible to find out all that is wrong with the property. Most importantly find out the condition of major items such as stove, dishwashers, air conditioning, water heaters, and roof. The repair of these items can bankrupt you very quickly, unless it is a fixer upper sold at significant bargaining price.

5. Choose property where people want to live, close to shops, parks and decent schools, and in a well-kept neighborhood. There's nothing worse than owning a rental property without any renters. Make sure tenants from the area have plenty of employment opportunities. rental properties belong to the district of great schools (make sure it really belong to that district because in many cases people living in the same zip codes maybe asked to attend two very different schools) and nearby beaches are the best.
6. Search past records for vacancy rates over the last five to ten years as well as at present. the best way to get these data is by insisting to ask the seller for financial statements. If not at least get the rent roll. Through the rent roll you can find out what lease terms current tenants are on, whether month to month or yearly lease. If yearly lease how much longer the lease term has remaining and the current rent rate.

7. bargaining points: anything physically wrong with the property, low pay out and long term contract for the laundry lease, short term tenant lease contract or long term tenant lease contract with low rental rate can all be used as bargaining chips while negotiating for the price of the rental property.

There are good and bad deals in all categories! It really depends on the individual home.

Are you working with an agent? Have they informed you about the new Distressed Property Laws in WA state? You really need to know about them, if you are shopping short sales or pre-foreclosures.

If you are buying a home that is a "distressed property" you have increased duties to the Seller, and increased liability! Sounds wierd, doesn't it? Thank our lawmakers!

Have your agent fill you in on the Distressed property laws. Or see a real estate lawyer.

You are smart--this is a good time to buy. Make sure you are also armored against liabilities!

Success to you! Linda

If you have the patience for short sales they are a good option. Short sale prices are below foreclosure prices, obviously. Forget going to the court house steps. Adding bank owned properties to the mix can be good. Bottom line, don't lock yourself in to any one type property. Have your agent provide lists of the best priced homes based on neighborhood, condition, and size. You may be surprised to discover there's more opportunity than just distressed homes. Don't forget new homes. Builders are offering incredible deals.

If there is equity yes http://www.lynn911.com

General answer, probably so. Better answer - depends on the market. Evaluate each acquisition separately. Never assume. Get a good agent and have them help you strategize.

Hi! You are definitely heading in the right direction by considering short sales/foreclosures as a way to add to your investment portfolio. We encourage the investors we work with to identify your investment goals, and then we put together a custom tour designed so you can view a series of properties that meet your criteria. For many of our investors, short sales fit the bill. Check out our strategy at http://www.BastianBus.com. We primarily work Pierce and also some Thurston County. The one thing you want to consider when making an offer on a short sale property is that the agent you are working with is experienced with the short sale process, as dealing with the banks on a short sale is quite different than a 'regular' residential transaction. I have earned a certification as a Distressed Property Expert because of my additional training in this area. Good luck!
Theresa Bastian
Keller Williams
253-376-4717 http://www.BastianBus.com

Yes it's a great idea. I have done that and it has really diversified my portfolio. With all these deals I am surprised there are still any foreclosures left to buy.