Home Buying in Canoga Park>Question Details

Chris, Home Buyer in Reseda, CA

When looking at buying foreclosures, what's the price one would pay: the defualt amount or market value?

Asked by Chris, Reseda, CA Mon Dec 20, 2010

I keep seeing these emails from reality trac which lists the default amount AND market value. What's the difference between the two..I'm VERY green at this home buying/hunting thing.

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John Souerbry’s answer
The only value that really matters is what you're willing to pay and what your mortgage lender's appraiser says the house is worth. RealtyTrac, Zillow, and similar sites take in a lot of market information, but they don't look at the specific property, which is what an appraiser does. That's why I always recommend that you talk to an appraiser first, don't go by what you see online, or even what your agent says. Talk to an appraiser.
0 votes Thank Flag Link Wed Dec 22, 2010
BEST ANSWER
Forget Realty Trac & the Notices of court sales, you won't be able to buy those using your VA certificate. You would have to have a Cashiers Check.

For listed bank owned REOs you CAN use your VA cert to buy it. Don't forget about offering on Short Sales too, there's less competition & you could get a great deal that way.

Any Realtor can help you purchase a home if you are a VA buyer, it's not the Realtor who needs to be a VA expert, it's just the lender you use. You should get a pre-approval letter from a major bank when submitting an offer, but if you have a mortgage broker you're using, just make sure your pre-approval letter comes with Departmental Underwriting approval, so you appear to be FULLY Qualified on any home you put an offer in to.

I'm not in the Reseda area, but I do know a great RE/Max agent in the area if you would like the referral.

Realty Trac is only reporting what's owed on a loan or Only the default amount. Sometimes you'll see a Realty Trac listing stating that there's a 2,000sqft nice looking house for $25K. You're not going to get it for $25K.

Email me if you'd like the RE/Max agent referral or if you have any other questions. I'm happy to help.

EmilyKnell1@yahoo.com
562-430-3053 cell
Realtor Since 1996
0 votes Thank Flag Link Tue Dec 21, 2010
The default amount would most likely be the amount that they owe or owed on their mortgage. If the property has already foreclosed, that amount no longer matters. The bank (new owner) would be looking for fair market value. A good real estate agent should be able to give you comparables for the property that you're looking at. If there is more than one buyer that has submitted an offer to purchase (multiple offer situation) then it's the highest and best offer that wins.

Feel free to let me know if you need any assistance. I specialize in Foreclosure & Short Sale Properties.

Good luck.

Sara Mehrpouyan, CDPE
Rodeo Realty
Direct: 818-903-2040
Email: smehr818@gmail.com
Lic #01712757

http://www.AtHomeWithSara.com
0 votes Thank Flag Link Tue Dec 21, 2010
Hi Chris, great question and one I get quite often from people who are just starting their search online. As my colleagues have said, RealtyTrac is misleading-- you really need to be a professional to understand what the numbers mean. Short answer-- default amount is how much a homeowner is behind in their payments. They would have to pay that amount to get their house out of foreclosure. This info used to be helpful when loans were easily assumable and the market is relatively healthy, but it is pretty much useless now. You want to focus on market value. I suggest using Trulia for your search-- it isn't always the most accurate as to what is available, but at least it will give you info you can use. When you are ready, I'd suggest contacting a buyer's agent-- it doesn't cost you anything (sellers pay commissions) and we can get you set up with the latest MLS info. I see you are in Reseda and I can help you out in that or any surrounding areas if you are interest. Good luck!
0 votes Thank Flag Link Tue Dec 21, 2010
Best advice you can get: Do not pay RealtyTrac for information. They are misleading you, and many buyers by selling you lists of defaulted properties at "prices" that sound amazing. Any agent can provide you the same list for free, and tell you how worthless it is.

And, to sum up what others have said: You'll have to pay market value for any property.


Richard Schulman
#1 Buyer's Agent
Keller Williams Westside Reealty
310-482-0173
schulmanrd@yahoo.com
http://www.RichardSchulman.com
0 votes Thank Flag Link Tue Dec 21, 2010
GREAT QUESTION:

Each home stands alone when submitting a sales offer SO there is no rule. In some instances we have instructed our buyers PAY OVER list price .

Your buyers agent will assist you based on research best sales offer submit for a winning bid.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Tue Dec 21, 2010
Keep in mind that RealtyTrac's information may not always be accurate and oftentimes can be misleading--you could be looking at a lis pendens property--notice of default--or some other kind of fee--some of those properties may not be for sale yet, and some may never be, if the default is satisfied by the owner. If you are interested in foreclosures, work with an agent--he/she will have access to reliable information--also don't overlook traditional sales as some may turn out to be a much better bargain than some of the foreclosure properties. As to what price one would pay--in order to determine a value, one needs to be aware of comps--recently sold similar properties in the immediate area, after reviewing the data a determination on price can be made--consider working with an agent of your own, as he/she can best inform you and be on the lookout for your best interest.
0 votes Thank Flag Link Tue Dec 21, 2010
Hi Chris,

"When looking at buying foreclosures, what's the price one would pay: the defualt amount or market value?
"
You would want to offer "market value", which is constantly in fluctuation based on available supply, market demand, and interest rates. Personally, I have not heard of anyone who has purchased a home for the default amount.


"I keep seeing these emails from reality trac which lists the default amount AND market value. What's the difference between the two.”
"
Default Amount (definition from RealtyTrac):
Pre-Foreclosure (Notice of Default or Lis Pendens)
The foreclosure process begins when a borrower/owner defaults on loan payments and the lender files a public default notice, called a Notice of Default or Lis Pendens. Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright.

Market Value: (definition set forth for U.S. federally regulated lending institutions)
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Whether distressed or not, your primary focus for determining what you offer should be based on a Comparative Market Analysis (CMA) that your Realtor performs. A CMA always provides the best representation of market price/activity/trend direction - for the SPECIFIC property details you search on.

DO NOT use Median price reports for making purchase decisions. A “median” is defined as “the number separating the higher half of a sample from the lower half.” For example, I’m sure you can appreciate the difference in data quality between an “all home sales in City X” versus “all home sales in City X that are 3 bed, 2 bath, 1700-2000SF."


“I'm VERY green at this home buying/hunting thing.”

Your first two steps should be finding a Realtor that you trust and communicate well with and a true Pre-Approval. Then, have your Realtor set you up with an automated MLS Search Agent based on your search criteria. This will be much more useful than spending your time on the web trying to find “a deal” only to find out in the end that it’s a misleading RealtyTrac listing. Less than 30% of RealtyTrac listings are actually for sale: http://docs.Steven-Anthony.com/RealtyTrac30.pdf

Unless you are paying cash, your Pre-Approval is vitally important to making a successful offer, which you can read about here:
http://www.Steven-Anthony.com/GettingStarted

Please also review this Trulia post:
http://www.trulia.com/voices/Home_Buying/Why_do_banks_want_a…

Best, Steve
0 votes Thank Flag Link Tue Dec 21, 2010
Chris,

Thank you for your question.....

Realty Trac information can be a bit confusing and many people find their information misleading...so you are not alone-regardless of your level of experience. Our advice is to seek a local real estate professional for their support. They will be able to provide you with the information you require and guide you through the buying process.

Determining the successful purchase price of a foreclosure can depend on a number of factors including-condition of the property, the amount owed to the bank, length of time on the market, the banks level of motivation, amount of interest in the property, etc. There is no magic formula.....but an agent familiar with your location should be able to help you.

We recently closed on a transaction in which the bank foreclosed on an amount of $75,000 owed to them and put an asking price on the property of $175,000. The message here is that it's important to do research and be familiar with the area's recent market activity of similar property.

Good luck,

Bill
0 votes Thank Flag Link Tue Dec 21, 2010
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