Archive for the ‘Foreclosures’ Category

The Rich Get Richure, The Poor Get Foreclosure

A number of social justice activists and others have pointed out the relationship between race and poverty and predatory lending practices. For example, the Center for Responsible Lending has published a study on Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages, documenting that African-American and Latino borrowers receive sub-prime loans more often than white borrowers, even when their credit history and other lending qualifications may qualify them for a more inexpensive loan.

Unfortunately, the geographical pattern of REO (Real Estate Owned, or “Bank Repo”) sales in the greater Sacramento area tends to support the idea that the link between predatory lending and race may be a very real one indeed. I recently examined the percentage of sales that were foreclosures (REOs) for the period January 1st, 2007 to August 21, 2007. Aside from a few statistical oddities, overall the pattern was pretty clearly one in which the most foreclosures occurred in the poorest neighborhoods.

Of course, just based on such a study, it’s impossible to say how much predatory lending is the culprit, and how much can be attributed to the rather banal idea that living in poverty may make the choice between food and the mortgage more of a common one than it is for rich people.

Community Zip Code Total # of properties sold # of Foreclosures Percentage of Foreclosures
Florin 95830 4 0 0.0%
Rancho Cordova 95742 41 1 2.4%
Downtown 95814 30 1 3.3%
East Sac 95819 176 6 3.4%
Granite Bay 95746 194 10 5.2%
Folsom 95630 579 33 5.7%
El Dorado Hills 95672 391 26 6.6%
Elk Grove 95757 233 29 12.4%
Sacramento (County-wide) – 7468 937 12.5%
Elk Grove 95758 377 50 13.3%
Rosemont 95826 194 27 13.9%
Antelope 95843 298 44 14.8%
East Sac 95817 93 18 19.4%
Florin 95829 128 25 19.5%
Foothill Farms 95842 153 33 21.6%
Florin 95828 221 52 23.5%
Franklin/Freeport 95823 205 51 24.9%
Franklin/Freeport 95832 33 15 45.5%

Am I Still Bullish On the Sacramento Real Estate Market, and Was I Ever?

Back in the early stages of the nationwide and Sacramento real estate market correction (or, depending on your point of view:  “downturn”, “collapse”, or “debacle”), a few of the folks who read the bubble blogs chided me for being too bullish on the market.  At the time I argued with some success that I wasn’t being bullish, I just wasn’t joining them in the bubble-bear’s picnic (much as I enjoyed the song of a similar name).

What I did at the time, and what I still do, is publish the numbers.  When the numbers drop, I said they dropped (whereas a real dedicated bull would say they “adjusted”).

Nevertheless, I suppose in some sense I always tried to overcome my innate pessimism by retaining a certain optimism about the state of the industry that does, after all, feed me.

I must admit however that in the last couple of days I was pretty shaken by two things, one in the press and the other in my practice, with the one in the press shaking me a bit more.

The article in the press was the Sacramento Bee’s article reporting on Countrywide was tapping a relatively high-interest credit line for cash.  The article also reported that the Moody’s credit rating agency has downgraded Countrywide to their lowest investment grade, one step above their highest rated junk bonds.  Although on the plus side a Moody’s analyst was quoted as saying that Countrywide was probably liquid throughout 2008, the very possibility of a major player like Countrywide being in trouble was enough to shake my confidence in the wider economic outlook, and certainly give me concerns over the money supply and the outlook for rising interest rates.

The second thing that shook my confidence somewhat and made me question “how low is down” were what seemed to me to be some fairly rapid increases in the decline in prices on condos.  One offer I’ll be working on today for an investor is for a condo in a subdivision and size that a month or two ago I was showing to another investor for 18% more!  Of course, that’s a single data point, so by itself it’s not a cause to go jump off a bridge if you own a condo in Sacramento, but it was nevertheless surprising.  At the same time I found some other condos that were selling around the peak for $180,000, now being offered in a couple of instances (as is, distressed sales) for about $120,000 to $125,000.  Granted, we’re comparing “best of breed” to “distressed sales”, so to some extent this comparison is unfair, but you might say the drop is on the order of $165,000 to $120,000, which is still about a 37.5% drop over two years. 

As is conventional wisdom, condos are “the last to rise, and the first to fall.”

Until now, when publishing the real estate numbers, I’ve always maintained that we’ve been dropping, but falling at a rate that’s been mild compared to the rate of increase.  Though this is pretty anecdotal evidence, it seems clear to me from the last couple of days of showing that the rate is accelerating, at least for condos.

My recommendations based on the above?

  • If you’ve despaired in the past of getting positive cash flow in Sacramento with a reasonable down payment, we’re at the point where that may well be turning around for many properties.
  • If you believe Countrywide is on the verge of collapse, don’t buy unless you plan to hold for ten years or more.
  • If you don’t believe Countrywide is on the verge of collapse, don’t buy unless you plan to hold for five years or more.
  • Try to time the bottom if you have cash.
  • If you’re in a position like my investor where the exchange rate makes now a favorable time, or if you’re depending on financing, buy now, especially if you’re in the market for a condo.

The first item is probably most important, because it’s a lot easier to hang in there waiting for the upturn when you’re creating cash every month than when you’re investing it.

Of course, these are (in the language of stock market disclaimers) forward looking statements.  You should base your buying decisions on your own research and considerations of the economy, cash flow, and other factors.

Sacramento Foreclosures and Short Sales – An Update

Last month we took a look at some Sacramento County Foreclosure and Short Sale Data, and at that time had MLS data to show active short sales at about 24% of inventory.  (Actually you’ll note the chart shows 11% + 12%, so that looks like 23%, but there’s a rounding error going on).

OK, I get it.  Is there a rounding error or not is not an interesting question, to all but the most bow-tie wearing of math geeks.

Here are the interesting questions:  What are this month’s numbers, and how do they compare to last month’s?  Do we have more foreclosures and short sales than last year, or less?

Well, darn, sports fans.  We have more.  Of our unsold inventory in MLS, here’s the breakdown.  Now we’re up to some 26% of overall inventory.  In Sacramento County as of this morning, our MLS inventory contains:

1,345 Real Estate Owned (Bank Repos) or 12.18% of total

1,533 Short Sales, or 13.88% of total

8,163 All others, or 73.93% of total.

(From now on, if anyone asks me the very common question “Do you have bank repos?”, I’m going to be fairly tempted to say, “Yes, as a matter of fact, we have 1,345 of them.  Let’s go pick one out.”)

Here it is graphically:

 

But the really, really $64,000 questions are these:

  • How big will those pie pieces get?
  • What time will it be when they’re as big as they’re going to get?

We don’t realistically expect the distressed properties to make up 100% of the total, since even if the market goes somewhere unpleasant in a handbasket, there’ll always be a number of “traditional” sales mixed in.

Have we posted the price curve lately?  I’m really starting to feel like old Ross Perot here.  So many charts.  So little time.

Sacramento Real Estate: all not lost!

The Sac Bee today reports that an Irvine-based foreclosure liquidator sold a house a minute to investors hungry for a bargain on Sacramento homes. For all the fear of a real estate bubble that everyone seems to be talking about, you have to admit a house a minute bodes well for all of us invested in our homes and investment properties.

Buyers on the fence, are you listening?

Foreclosures and Short Sales Increase in Sacramento County

Of all the market numbers we write about, no other indicator has changed so dramatically over the last year as the number of short sales and REOs (real-estate-owned, i.e., “bank repos” or “bank owned”) that are being sold through the MLS.  In fact, no other indicator even comes close.

During the period from the first quarter of 2006 to the present, Sacramento County has gone from a market where short sales and foreclosures were practically unheard of, to a market where they make up almost one quarter (23.7%) of the available inventory.

In the first quarter of 2006, the short sales and foreclosures together accounted for less than 1/4 of one percent of all sales.  Five REOs and four short sales were sold, of a total of 3,614 units overall.  A year later, in the first quarter of 2007, foreclosures and short sales made up approximately 9% of the sales volume.  2,872 total residential units were sold in Sacramento County during this period, of which 191 (6.65%) were listed as REO, and 69 (2.4%) were listed as short sales.

The sales numbers for Sacramento County for the second quarter of this year (to date) are higher, with 12.58% of sales in the REO category and 3.46 in the REO category, or approximately 16% of all sales.

Though we show more sales of bank repos than short sales, we actually have more short sales in inventory.  The inventory numbers are where it really looks like a short sale invasion.  With 10,374 active units as of 5/22/2007, 1,163 are listed as REO (11.21%), and 1,294 are short sales (12.47%).  As we noted at the outset, the total of these two figures comes quite close to one quarter of all available inventory.

(Note: The number of short sales in the MLS as a percentage of the total is difficult to gauge with any accuracy because there are two fields where short sales are reported.  We have generally used the higher number).

Foreclosure Class

I had the pleasure of attending a great class on short sales and foreclosures yesterday, presented by Jeff Yonamine of Foreclosure Resources that was hosted by the good folks at Finacial Title. I’m still digesting a lot of the good information we received, but meantime here are some tidbits:

  • The number of foreclosures in the US increased 68% in November 2006 from November 2005.
  • Jeff expects prices to continue to decline for the next few years, given the historical long term pattern of real estate prices (approximately fifteen years from peak to peak, or from trough to trough, if you prefer).
  • Mortages are most likely to default in the Bay Area counties of Marin, San Francisco, and Santa Clara, and less likely to defaut in the Greater Sacramento area and other “low priced” areas of California (yes, I know saying “low priced” and California in the same sentence is oxymoronic, but at least I’m no longer vanilla moronic).
  • If you’re an investor looking to buy a foreclosure property, the California Association of Realtors® was good enough to include a new form that allows us to work with you to help you locate a property. (We still can’t represent you as an agent on the transaction, however). By the way, if you’re looking to buy a foreclosure to live in, that’s no problem — we can represent you on such a purchase just as we always could. (Actually the class was a bit unclear — possibly incorrect — on the latter point, so I’m taking my stand from my reading of the California Equity Purchaser Law, but I should probably run it by the California Association of Realtors® legal hotline folks to make sure the law hasn’t changed. I love calling them, which is the definition of a real estate geek, besides wearing lockbox key pocket protectors.)
  • For those of you who’ve been through a short sale and experienced all the fun we have with these, Jeff presented the case for feeling a little less spiteful toward the lender rep, noting that in some cases he’s seen one person with a case load of up to 350 active short sales going at the same time.

Sacramento Short Sales

Short Sale Empty WalletIn a recent post, we looked at the number of short sales, real estate owned (or “REOs” — bank repos), and properties with a foreclosure pending were listed in the MLS. Today I want to focus on two of those categories, short sales and REOs, and see how the sales numbers hold up to the inventory numbers, and how those numbers have changed over time. We’ll also try to explain why short sales seem to get sold less often (percentage-wise) than REOs, even though the amount they’re discounted is quite comparable.

Throughout 2005, short sales and REOs made up a fairly insignificant portion of the total residential sales reported in the MLS for Sacramento County. Indeed, only twenty-four such sales were reported in the MLS for all of 2005. Short sales accounted for .05% of the total sales volume in the first half of 2005, and .03% in the second half, while REOs accounted for .06% and .07% during the same period. In other words, added together, both categories barely managed to break the one tenth of one percent mark (i.e., about one in 1000 sales).

In 2006, the numbers of short sales and foreclosures rose steadily. During the first half of 2006, .35% of sales were REOs, and .10% of sales were short sales. During the second half, the percentages were 1.33% and .60% for REOs and short sales, respectively. So by the end of 2006 we were up to almost 2% for both categories.

In 2007, the numbers increased even more dramatically. So far for 2007, 5.15% of the homes sold are REOs, while 2.52% of the homes sold are short sales. In other words, foreclosure sales of one sort or another make up almost eight per cent of all MLS sales.

Of course, that’s less than the roughly fifteen per cent that we have in inventory. As we saw in our February article, short sales make up the largest portion of the inventory for all “foreclosure” categories. Here’s that chart again:

Short sales

So REOs sell at more than double the rate of short sales, yet the discounts on these homes are quite similar. For 2007 year to date in Sacramento County, I found that REOs discounted at an average of 11.06% from non-foreclosure properties, while short sales are discounted an average of 11.09%.

Why the discrepancy? There are several possible reasons, but in my opinion the most important reason is that most Realtors® don’t like to do short sales. Selling a short sale means the lender has to approve the transaction, which means that the transaction takes longer, has more decision makers involved, and requires more effort than a traditional sale. Moreover, lenders will frequently cut the commission offered in the MLS when finally faced with an offer, and the amount of such a cut cannot be determined in advance. The upshot is that — from an agent’s point of view — short sales mean more work over a longer period of time, and less pay.

There may be other reasons why REOs tend to sell better than short sales. For example, REOs by definition are pretty much always vacant, and vacant properties are definitely easier to show. I believe they’re typically easier to sell as well, since the buyer doesn’t have to first mentally remove the seller’s furniture before mentally adding their own. On the other hand, it may also be that we’re looking at the wrong end of the pipeline, and perhaps it’s simply the case that more recently, more and more short sales have been available. In fact, since short sales are in an earlier stage of the foreclosure process, when we start to see relatively more REOs it may mean that the worst of the foreclosure period is behind us.

Remember, short sales and REOs are discounted an average of about 11% from other properties, so if you’re interested in finding out what short sales or REOs are available, just drop my team an email and ask for a list — or feel free to give me a call directly at (530) 672-9160. Just let us know which areas you’re interested in and we’ll get you the information you need.

Sacramento Foreclosures

I recently reported briefly on a USA Today article that claimed that short sales in Sacramento County were up to 20%. When I hear such numbers, I like to try to first verify them and dig a little deeper. As always, the MLS provides a wealth of data about the real estate market in the Sacramento area, and anyone with a bit of ingenuity can mine it.

My first task was to look at some raw numbers both for the total active units and then for the numbers of those that were in some stage of foreclosure. The three foreclosure stages reported in the Existing Financing field in the MLS are Short Sale, Foreclosure Pending, and REO, which roughly translates into pre-foreclosure, in foreclosure, and bank-owned (after foreclosure). I say roughly because first of all there may be some overlap between Short Sales and Foreclosure Pending. Secondly, one could make a case for short sales not being necessarily all pre-foreclosure, though I’ll treat them in the remainder of the article as though they are. (Elsewhere, I discuss these stages in more detail and the pros and cons of buying homes in different stages of foreclosure.)

Because of the overlap between the categories, the total number of foreclosures in any of the three categories (1283) is different from the total of each of the categories (1338). Looking at the categories and the total actives individually, we come up with the following data:

Sacramento County Foreclosures
All Active Properties 8,291
Short Sales 557
Foreclosure Pending 77
REO (Real Estate Owned) 704

The following two charts show how the foreclosures stack up as a total percentage of Sacramento County homes currently for sale, and how much of each category makes up the total:

Foreclosures in Sacramento County

Breakdown of foreclosures for sale in Sacramento County by stage of foreclosure

As you can see, homes where the seller was in some sort of financial trouble make up at least 15% of our inventory. (I say at least because in my experience agents don’t always list all the data that pertains to the home correctly). REOs make up the largest portion of these. (The optimist would say it’s because the recent foreclosures are down, but a pessimistic interpretation is that REO inventory is building up even more over time).

In future articles, I will look at how the percentage of short sales has varied over the last twelve months or more, as well as the average price differences between the short sale / REO and the rest of the market.

Short Sales Make Up 20% of Sacramento County Inventory

The California Association of Realtors® web site recently alerted me to USA Today’s report that claims that 20% of all homes for sale in Sacramento County are short sales. I’ve been meaning to do some research of my own into those numbers, since I’ve been seeing quite a few short sales and REOs (“Real Estate Owned” — another word for bank repo, where the bank has already obtained the home through foreclosure).

Short Sales – Bargain or Bait and Switch?

I had an inquiry today about a home in Placer County about a home listed as a short sale that turned out to be quite interesting as I dug into it.

For those not familiar with short sales, short sales are short in the sense of “short on cash”, and the term refers to any sale where the procedes from the sale won’t be enough to pay off the outstanding debt and the closing costs. So the seller, anxious to avoid the negative impact of a foreclosure, asks the lender for permission to do a short sale. In other words, the lender is being asked to take a reduced payoff on the note they’re holding.

After looking at the comparable sales, I have a feeling that the buyer may have had an interest in the home because it was priced very agressively. The home was listed at $320,000 (which worked out to $219.21 per square foot), in an area where the comparable sales showed an average pending sale price of $237.46 per square foot (list price) and an average sold price of $241.43 per square foot (sale price).

Why price it so low? When you think about it for a minute, you’ll realize that you’ll almost always see a pretty good discount on a short sale, for the following simple reason: short sales are one of the rare cases (possibly the only case except perhaps probate) where the person who’s pricing the home is different from the person who’ll decide if the offered price is high enough. You see, a short sale by definition is one where the seller makes no money, and the seller’s asking the lender to accept less than the loan amount. Because of this, the seller is inclined to price the home very agressively indeed, since it’s not the seller but the lender who’ll have final say over whether to accept the offer.

Our next step after checking the comps was to check out how much of a hit the seller is asking the lender to take. Checking the mortgage history in the tax rolls, I learned that the most recent refinance of the home had consisted of two loans taken out at the same time in 2006, one for $331,200 and the other for $82,800, for a total of $414,000. So the home was being listed for some 77% of the value of the loans on it, and the lender would receive something slightly less than that after closing costs.

The Plot Thickens

What caught my eye at this point was something really interesting — the name of the broker selling the home was the same as the name on the tax rolls. At this point I began to suspect some looming mortgage fraud conspiracy, but it turned out the broker only had one or two homes in Placer county. It could still be loan fraud, but I couldn’t easily prove it to myself based on a pattern.

At the same time, since I would be representing the buyer if I represented anyone at all, a question that was more interesting to me than the integrity / lack of integrity of the seller was whether the lender would go for the sale. What usually happens during a short sale is that the lender will order either a full appraisal or a Broker Price Opinion, and decide whether and how to negotiate based partly on that. So from a buyer’s perspective, the thing you should know (besides the fact that they take a long time) is this: unlike most sales, you can’t assume that even the asking price is one that will get you the home (let alone the discount that you’re likely to ask for because you know you’re in a buyer’s market).

In researching the issue further, I happened across a great technical bulletin (in PDF format), published by Land Title Guarantee Company, which goes into the sorts of details a lender will be looking at when deciding whether to accept a short sale. If you’re interested in getting a bargain through pursuing a short sale, this technical bulletin should be on your required reading list.

Buyer Seminar Progress

Yesterday I started writing about a buyer email seminar series that I’m putting together with the help of Jen Yee at Metrocities Mortgage. We’re starting to make a modest amount of progress on that effort, and have secured a URL to host it, but there’s really nothing to show there yet except for a repeat of yesterday’s outline and a few still-cheesy graphics.

Meantime, at the risk of upsetting another friend who helps me out tremendously in my business, I should point out that Linda Spafford has a draft of some info for first time home buyers that we hope she’ll also be making available some time, though I know Linda also has a lot on her plate these days so that may be for future.

For the buyer seminar, we do have a deadline / tentative launch date, which is February 28th, and within a couple of weeks we hope to have de-cheesed the site to start pre-registering buyers who are interested in getting the material when it’s available.

The point of this seminar will be to reach buyers who want to have access to the same the sort of help and counsel that Jen and I would give them if they were already working with us, without having to commit to meeting us face to face. In that respect it’s especially appropriate for first time buyers, but we plan to have enough information in there to make it worthwhile even if you haven’t bought in awhile or want to get more in depth about the buying process without actually sitting down with an agent. For example, we’ll have some information there about what you should be thinking about when you negotiate your price with a seller, and what sort of bargains the current market may offer (for example, short sales and REOs).

To some extent we may also be publishing some of that information here as well, but since it’s a seminar series, it really lends itself better to a non-blog format, even if just a static web site. We’re publishing it a seminar series instead in the hope of providing a sort of “low risk” entry into using our services. At the same time, we’re going to try to put together some really high value content, and so in that respect it’s not appropriate for this Web 2.0 Daily Drivel format either.

Recent foreclosure article

I recently wrote an article about NAR’s take on foreclosures that you might find interesting.

Arguably that article should have been here — if I’d have known I’d have had a category here for it it would have been!

Live and learn.

Dataquick and Foreclosure Numbers

I wonder if anyone has a good read on Sacramento foreclosure numbers and how they compare to the numbers in other markets. Maybe the author over at Sacramento Landing, or some of his readers? That’s the kind of stuff Lander and the crew are quite good at compiling. I wonder if Dataquick compiles that stuff? They compile everything else.

This is just something I woke up curious about today, that’s more or less related to real estate.

The next post gets weirder and more off topic. Hang in there.

Foreclosures and Short Sales and REOs, Oh My!

Lately I’ve been working a lot on transactions on homes that are either owned by the bank or soon to be owned by the bank because the seller is in financial trouble. Ironically, some of this has come up while representing a family whose rental was recently sold at auction because their landlord didn’t make her payments. The bubble blogs are notorious for predicting situations like this and therefore, let’s give them their due and say it: they predicted situations like this.

As a Realtor®, the work becomes challenging as my buyers want to move quickly, but one of the drawbacks of a short sale situation is that they take a long time.

I thought this would be an opportunity to define a few terms, because buyers often ask me if I have access to foreclosures, and wonder how go go about buying a foreclosure.

Do We Have Foreclosures? The Short Answer.

The short answer to the question of whether Realtors® have access to foreclosures is “yes, absolutely”, because many homes are listed either by buyers hoping to avoid foreclosure in the future or banks that have already foreclosed and now own a property which failed to fetch a satisfactory price at a trustee’s sale. Buyers are interested in such properties because they may often be listed and acquired at prices that are significantly below market.

Short Sales

When a seller is in trouble and doesn’t have enough equity and cash to sell the home, pay the costs of sale, and pay off the loan, the home may be listed as a “short sale”. Short sales are called short because the sellers are short on funds, but ironically, sales where the seller is short on funds often go “long” when you talk about the escrow period. You won’t find the usual 30-day escrow period here. Instead, escrows of forty-five to sixty days and more are the norm. Short sales take extra time because the lender reserves to themselves the right to approve or reject the lower payoff that the seller is asking them to make, so another irony of the short sale process is that you’re working with the ultimate motivated seller whose hands are more or less tied by the lender.

Another drawback to short sales is that the lender is looking for the best offer, and they typically reserve the right to continue taking offers throughout the process. This means the money you pay towards inspections such as whole house and appraisal is at somewhat greater risk than on a typical sale.

A short sale may or may not be one in which a Notice of Default has been filed on the property.

Notice of Default

Most loans in California are secured not by mortgages, but by deeds of trust. A deed of trust is when a third party (the trustee) holds the “bare legal title” and the right to foreclose on behalf of a beneficiary (then lender). When a lender wishes to foreclose under a deed of trust, he tells the trustee, who then files a Notice of Default against the borrower. Once this happens, the trustee can sell the home, but only after a time specified by law and following additional steps. When a Notice of Default is filed, the property is often said to be “in foreclosure”.

What many buyers and their agents don’t know about Notices of Default is that once one has been filed, California law protects owners (borrowers) from unfair practices by “Equity Purchasers”. (California’s Equity Purchaser Law, California Civil Code, section 1695-1695.17). One element of this law that even many real estate agents are not aware of is that they must carry a surety bond equal to double the fair market value of the property if they represent a buyer on such a transaction who is purchasing the home, except in certain well defined cases, for example, where the buyer is purchasing the home as their primary residence.

Since as far as I’m aware no insurer provides such surety bonds, the upshot of the law is to put agents and brokers at risk if we represent you as in investor on the property, though there is no such problem if you’re occupying the home yourself.

Buying at a Trustee Sale

Another way to aquire a foreclosed property is to actually purchase it at the trustee’s sale. John Lockwood Associates does not currently represent buyers who wish to do this, and interested buyers are cautioned that such sales require considerable planning and research, since many of the typical protections and inspection periods do not apply to such sales.

Real Estate Owned

Sometimes called “bank repos” or REOs, “Real Estate Owned” is the accounting term that lenders use to show properties that they own, typically by having purchased them at the trustee’s sale when no one else purchased the property. Sale of these properties is less encumbered by the lengthy process you encounter in a short sale, because the lender who wants to recoup their losses and the seller are one and the same. Moreover, they’re exempt from the California Equity Purchaser law because the notice of default against them is no longer outstanding.

Because of these facts, REOs are somewhat easier and more straightforward to purchase, and they’re readily accessible to both owner-occupiers and investors alike. One down side of REOs is that the lenders sometimes ask for a fairly detailed addendum that makes the sale “as is” and may limit the buyer’s ability to recover their purchase deposit if they do not go through with the sale. Since I’m not a real estate attorney, I can’t advise you as to how enforceable those addendums are, but as a practical matter, I’ve been advising clients working with REOs to limit their deposit money to a token amount to mitigate their risks.

Conclusion

Foreclosure properties, especially short sales and REOs, offer considerable opportunities for buyers to get a home at a very competitive price compared to other homes on the market. This is especially true if you’re buying the home to live in. As is often the case in real estate, however, when you get a great price, you may find that you get not-so-great terms. An experienced Realtor® can help you understand what some of the trade-offs are and help make sure your interests are protected.

Foreclosures are an excellent choice if you have time and want to find a bargain, but they’re not a good idea if you’re in a hurry to move or you’re squeamish about terms.