Home Buying in San Marcos>Question Details

J Melton, Home Buyer in 91942

Short Sales and Foreclosures

Asked by J Melton, 91942 Fri May 30, 2008

My wife and I are looking to buy our first home in the San Marcos area, but all that appears to be in our price range (300k) is short sales and foreclosures. What are some of the things we can expect when dealing with these type of sales?

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Short Sales: Expect long wait times. Both the bank and the seller must accept the offer. It can take weeks or months to hear back from the bank. Sometimes you get no repsonse. When it comes to short sales they is no guarantee that you will get the house. My buyers who make offers on short sales, I advise them to make and offer without expectations and move on.
Bank Owned: Some banks,even if you are already preapproved, they require you to preapprove through a certain individual before making an offer and some do not. Now, you do not have to use their person, you can still use your own mortgage broker. Expect the bank to take as long as 2 weeks to "officially" accept the offer. Be prepared to sign addendums furnished by the bank. These addendums vary with each bank but know these addendums serve only one purpose and that is to protect the banks. With a bank owned do not bet on getting any kind of closing cost assistance or repairs down. I have heard of a few cases wherein the bank was willing to give a bit, but in general that is not the case. When making an offer with a bank, know that you must have all of your ducks lined up. Some banks expect you to perform in a very short amount of time. In addition, as you probably have noticed in San Marcos the bank owned properties under 300k need work. So be sure to figure that it to your overall budget. As well, make sure you have a good home inspector. The bank does not have to furnish you any information on the property. A good home inspector is a must! If you need referrals I have a few.
My biggest advice to you is to get a realtor who can help you navigate through all of this. You the buyer do not pay the agent, the seller does. So, it is in your best interest to have someone working with you.
On a side note, there a great deal of properties in pre-foreclosure in San Marcos, which means an increase in bank owned properties in the near future. I feel you as the first time home buyer will greatly benefit from this market.
Good Luck to you! If you need any assistance, or would like home inspector referrals feel free to contact me.
Web Reference: http://www.abellre.com
0 votes Thank Flag Link Fri May 30, 2008
You never know what you will find when you open the door of a foreclosure or short sale home. I have seen kitchens ripped apart, carpet torn up and holes in walls. There are a lot of angry people out there and some have just given up. Their homes show their feelings. A good portion of these San Marcos REO, short sale homes are in need of TLC. HOWEVER, you can find that diamond in the rough or your dream home. It has been done, I've done it, and so can you. Your real estate agent should be able to direct you in the right direction.
0 votes Thank Flag Link Wed Jul 2, 2008
I have more time to write now and it's an excellent question. I've been answering this one on the phone a lot these days. Continuing ... Here's a real life example of a bank owned. Made offer April 3rd. Submitted highest & best April 10th because 6 offers received. My client was the winning bid and notified April 17th. Waited 1 month for the signed contract from the bank. Now waiting another week to be told who escrow is. Meanwhile the house is vandalized. I submitted bids for the missing items and the bank has agreed to pay it! Meanwhile escrow says they couldn't possibly close any faster than 30 days from today while we wanted to close April 15th. That's a true story. Each bank is different on how they treat short sales and foreclosures. There are also many third party companies that are "facilitators". I kid you not! There are more people involved in every transaction that make it go slower than ever, but the reason is simple. The volume of files on each person's desk is huge. Meanwhile the bank continues to lose money to theft, carrying costs, etc. Hopefully, they'll continue to staff up but it is a long slow process. Bank owned used to mean faster than short sales but not always. A quick response means about a week and there's usually a caveat that says "offer accepted subject to senior management approval". Meanwhile offers continue to come in sometimes bumping the verbally accepted offer. A lot of the REOs now list what buyer assistance they are willing to pay in the MLS so realtors can see what they will accept with the offer. So, don't be afraid to ask for closing costs. Let your Realtor guide you. Just know you'll have lots of competition and make your best offer. If a house is priced low at $250,000 for example and they are willing to pay $5,000 in closing costs but you need $7,000, consider making your offer $253,000 with the $7,000 credit. The net is what the bank considers. I've trumped several other offers asking for less closing costs that way. But I've had other buyers who had to learn the hard way that you can't ask for the world on a house you really want. If you're going to live there for years, don't try to low ball and ask for closings costs and ask for ... You get the idea. As a first time buyer it will be a tough way to buy your first house but you'll get a great price and learn a lot in the process. Alison's advice is right on about home inspections. It's your obligation to inspection anything and everything that you want to know more about. The bank has a minimal obligation to disclose, but you can get your own termite inspection too. I've also been seeing REOs this week that the bank has had cleaned, painted and carpeted, so times are changing. One bank fixed a pool for me this week. So, jump in - the water's fine!! Good luck.
0 votes Thank Flag Link Fri May 30, 2008
Pre foreclosure is the term used, for properties that are in default on their loan but have not yet through the entire foreclosure process, and the bank has not taken the home back yet, in other words"before foreclosure."
Some of these properties may already be on the market, many as short sales.
Try looking at these articles:
http://homebuying.about.com/od/4closureshortsales/qt/093007_…
http://homebuying.about.com/od/buyingahome/bb/BuyingShortSale.htm
http://homebuying.about.com/b/2007/12/19/buying-foreclosure-…
If I can help you any further please feel free to contact me
Web Reference: http://www.abellre.com
0 votes Thank Flag Link Fri May 30, 2008
Alison,

You mentioned 'pre-foreclosures'. Can you tell me a little bit more about those? Are they different from short sales and regular foreclosures?
0 votes Thank Flag Link Fri May 30, 2008
Hi J,

Congratulations for taking the plunge! Short sales and foreclosures (real estate owned by the bank = REO) are both rewarding and frustrating. They frequently take longer than a traditional sale with a lot of hurry up followed by waiting. Be sure to be preapproved with a good lender so that when you find the right house you can make an offer quickly. REOs are experiencing multiple offers since they are priced lower than the comps. You'll want a good buyer's agent that can position your offer for success. As a first time buyer there are special program to help you. In Escondido, first time buyers may be eligible for $25,000 in assistance. There's a lot of write and you'll get good info here but that's my initial 2 cents worth. Best of luck to you!

Diane Conaway, RE/MAX, (760) 749-2888
0 votes Thank Flag Link Fri May 30, 2008
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