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Real Estate & Finance News That Affects Your Home                                                     December 2008 - Page 1

If you've been priced out of the housing market, now is the time to consider buying a foreclosed property. But don't wait; the best-value foreclosed homes--what we call "real estate owned" (REO)--are selling as soon as they come on the market.

Although buyers can also find bargain prices on pre-foreclosure sales or homes sold at foreclosure auctions, most buyers find it easier and less risky to purchase REOs from the lending institutions and government authorities that repossess these homes. (Note: REOs also can refer to properties purchased by corporations from their transferring employees. This article focuses on REOs resulting from foreclosure proceedings.)

Finding a high-value property and negotiating a low-cost contract are the keys to success in the months ahead. Here is the critical information REO buyers need to know:

Why Buy An REO?
REO homes are most attractive to buyers looking for bargains. They know lenders and government organizations don't really want to own homes and would rather move their "non-performing assets" off the books as quickly as possible.

Still, being responsible to stockholders or taxpayers means institutional owners will try to recover as much of their investment in a foreclosed home as possible. Negotiating is key to getting a true bargain price on an REO!

REO foreclosures offer some distinct advantages to buyers:

• Opportunity for professional inspection. Being able to thoroughly inspect an REO can help ensure against unexpected problems and expensive repairs. Inspections are often not an option at earlier stages of foreclosure, especially at auction, when properties are frequently sold "as is."
  
  
• Easier financing. The lender or government agency may offer an attractive financing package, perhaps including a lower interest rate or smaller down payment requirement than might be available on the open market. Chances are also better that outside lenders will consider financing an REO, since their appraisers get a chance to look at these properties. REO buyers can also negotiate for a financing contingency in their contract with the seller.
  
  
• No eviction problems. By the time institutional owners put their properties on the market as REOs, former owners or tenants typically have already moved out. Again, this may not be the case with pre-foreclosure and auction sales.
  
  
• Better condition. Homes in default and sold at auction may not be in great shape, either due to neglect by their cash-strapped former owners or damage caused by disgruntled residents or vandals. Lenders and government organizations selling REOs, however, sometimes make repairs, returning properties to livable condition--or discount the prices to sell more quickly.
  
  
• Listings with brokers. Most REOs are listed for sale with a real estate broker/REALTOR® who is bound by law and ethics to represent the property truthfully. (In some states, however, lenders are exempt from some disclosure rules. Ask us.)
  
  

Call On Us--Your Neighborhood Experts
Remember: All real estate is local. That's why it's more important than ever in 2009 to work with a top-notch local real estate professional--after all, you're not buying a home across the country, you're buying a foreclosed property right here.

We can help! As experienced neighborhood specialists, we make it our business to represent buyers of foreclosed properties. Contact us to learn how we do it. There's no cost for this information--and absolutely no obligation to you!

The Process Of Foreclosure The term "foreclosure" can be confusing; it really refers to a three-stage process: Pre-foreclosure--initial stage when homeowner misses payments (becoming "delinquent"), then defaults on mortgage, and lender begins foreclosure proceedings with "notice of default." Auction (also "trustee's sale" or "step sale")--the stage at which the property is put up for auction by lender; proceeds repay lender (and homeowner, if any money is left over). Post-foreclosure--when properties that didn't sell at auction are repossessed, becoming REO by a lender or government agency such as the Federal Housing Authority (FHA) or Veterans Affairs (VA).