Why Buy from an Owner verses a Bank

There is at least ONE PLUS to buying foreclosed property, also often called an "REO" (already bank owned) or those that are sold under a "Short Sale" (SS) where the bank has to approve taking less than is owed on the existing mortgage. --- That PLUS is that the price is probably pretty good.

But there are also a host of NEGATIVES to buying those properties... Now, I hear you already, BUT DONNA... THIS IS SUPPOSED TO BE GOOD NEWS!

Well, sometimes knowing possible pitfalls can BE good news! So, here are some things to think about when deciding whether to offer on a home owned by a PERSON or one that the BANK will be involved in.

1. On an REO or Short Sale it's hard to get a clear answer to your offer quickly. An REO is often slightly faster than a SS, but it can still take weeks or even months. In some cases more than 6 months... Just to get an ANSWER on your offer. It's frustrating and if you NEED to buy quickly, it may not be worth it.

2. Once you think you have an answer, it often takes many MORE months to close on the deal and there is a higher than normal chance that the deal falls out of escrow, which means you never get to buy it. There are dozens of reasons "why" if you want to know, just ask me and I'll list some of them for you.

3. You get no warranty or disclosure with REO's and with a Short Sale, you may get a disclosure, but the owner is in trouble anyway... you could sue them for undisclosed defects, but they have no $$, right? As part of the contract, many Bank owned REO's have you to sign away any rights to sue for undisclosed defects. They probably don't know what they are anyway. The price needs to really be a bargain for you to accept that liability after closing.

4. Speaking of defects... if someone is giving a house back to the bank, or is forced to sell with no equity (short), then how much maintenance is being done on the house? Answer: In many cases, it could be little to none. These properties are cheaper for a reason... and RARELY a true bargain when all is said and done. If it's in good shape and a good price, then YES, you might have a winner worth jumping through hoops for...

5. The hoops you jump through even to make an offer are something else you should expect... often the bank requires you are pre-qualifed, or pre-approved by both your lender AND another lender they select. They often require control of your escrow deposit, verses your Broker. And they may require you use a title and/or escrow company that THEY choose. In a "normal" purchase, YOU normally choose many of those.

So, here's the answer.... USE the properties for sale by banks and short sale owners in your NEGOTIATIONS with a GOOD Seller ...one that can answer your offer quickly, close when YOU want to, give you a meaningful disclosure statement, offer some liability for undisclosed defects, etc.). OR.. IF YOU ARE GOING TO BUY A SHORT SALE OR REO it's important to know that you need a GREAT EXPERIENCED AGENT TO HANDLE THIS SORT OF PURCHASE FOR YOU... We can help you negotiate a GREAT DEAL for a property without all the problems. Or navigate those problems with experience. Contact me today!

RECOVERY!

Yeah! Top economists all over are saying we are already in a recovery. The worst is over, consumer confidence is rising and it's time to get back on the horse and RIDE! Robert Brusca of FAO Economics said labor growth is going to be strong 2nd half of this year and Joseph Carson of AllianceBernstein said that there are MANY signs in home sales, stocks, even retail sales. He said by the time the stimulus package really hits, we will already be on an upturn!
If YOU are looking to buy or sell, now is the BEST time in the last 2 years! Do it today! CLICK HERE TO EMAIL ME

The Universe's Message to me today

These are the times, Donna, when hopes are dashed and chaos abounds, that golden opportunities, prized ideas, and new friends emerge into the view of all, but are only seen by the few who look.

Let's go crazy,
- The Universe

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Good News!

This week's news in housing was positive for a change. February Existing Home Sales rose 5% from January. Inventories of unsold homes were at a 9.7-month supply, about the same as last month and not bad in the scheme of things... (would like to see it at about 5-6 for balanced market. February New Home Sales also rose 5%. The Mortgage Bankers Association (MBA) revised higher its forecast for new loans in 2009 to 2.8 trillon up from 2.0 in earlier estimate. The increase was due to a projected rise in activity as a result of lower mortgage rates.

30 year conventional mortgages remain anywhere from 4.625% to 4.875%. Thanks Marie for the info to share!
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