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Foreclosure in Campbell : Real Estate Advice

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  • Local Info8
  • Home Buying33
  • Home Selling2
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Activity 2
Tue Feb 15, 2011
Rebekah Owen, Broker answered:
Stooge,

[what a great user name :-)]

How'd you do? Did you get a super duper deal in Campbell?
How'd the process go?
Was is smooth sailing or was there a bottle neck?

I like to hear how clients view the market. It helps me allay their fears and avoid problems.

Thanks in Advance,

Rebekah
RebekahOwen.com
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Wed Jan 9, 2008
Terri Vellios answered:
Foreclosure is a term widely used but misunderstood and misused. What we are seeing right now are a lot of short sales. This is where the seller will not have enough money to pay off the balance of their loan, thereby, they are short. The lender will have to agree on how much they are willing to accept below the balance. This may take a while and you usually can do inspections during this process. Don't expect the seller to make any repairs, just no money to do so.

Then there is the REO or bank owned property. This is where the bank has title to the property. You should be able to get an inspection contingency but again no repairs by the seller.

A true Foreclosure is a process where the seller is behind on their payments and the trustee (lender) must follow a specific procedure in order to sell the property. You will see notices of these in the paper and a time for auction. The seller may bring his/her payments up to date 5 days before the auction date. Once the home goes on auction the buyers will have to have cash or cashiers check in hand for the full purchase price. There are not inspections, no contingencies, and no warranties.

Finally, there is a real estate company who now uses "Auction" as a marketing tool. The will have a bid date with a starting bid amount. What buyers must understand is that there is a blind minimum bid needed in order for the seller to sell. So when you see a million dollar home with a start bid at $500,000 there is a "majic" number the seller is willing to accept. It is usually closer to the million range. They also will need to have at least two people willing to bid. If it doesn't sell then the Seller will go back to traditional marketing. Inspections may have been done and probably can be performed. What is also noteworthy that the Buyer will pay a 10% premium over the final accepted bid. This means the Buyer is paying all commissions and closing costs. Not such a bargain.

The beauty of short sales for buyers is they can come in with a low price and not offend the banker. It's all about the numbers.
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