America is on the brink to experience the highest foreclosure rates ever. Foreclosure listing service RealtyTrac Inc., recently released new data indicating that the pace of foreclosure is quickening and by year's end, there will be more than 1,000,000 bank owned properties (aka REO).
Financial institutions are in the money, not real estate business. That fact means that large quantities of real estate owned properties are being highly discounted below market value so banks can more easily unload the properties and get them off their "books." According to real estate site Zillow.com, REO homes typically priced 20 to 30 percent the market value as compared with traditional home sales, bank owned properties extremely enticing.
Many current owners of formerly foreclosed properties have successfully navigated the REO industry by entering the game cautiously. Typically, REO properties are sold in "as in" condition as the banks do not want to invest any additional money into the transaction.
When it comes to buying a foreclosure, homebuyers should not be shocked to stumble into a home stripped of basic necessities like kitchen appliances and light fixtures. Consumers need to budget accordingly to replace those items as well as splurge on a professional home inspection before making an offer.
All About Short Sales
Short sells are a strategy implemented by homeowners on the verge of a mortgage default. The financial strapped homeowners will work directly with their lender to get them to accept an offer on a home that is less than what is owed on the mortgage. This monetary difference is what puts the "short" in the moniker and home shoppers need to realize that adjective has nothing to do with the time it will take to complete the transaction.
According to Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a national pre-foreclosure asset manager, short sales typically offer discounts ranging from 5 to 8 percent below market value. Some may describe the price adjustment as a customer courtesy as short sales can take many months to complete and are filled with uncertainty as in the end, the lender may reject any offer.
All About New Home Discounts
Nationwide, brand new homes are still not occupied because of the recession and the construction company that handled the jobs is in the position of competing with all the other market conditions. They need to unload their properties to try to recoup some of their losses, and discounts in the form of low interest home loans is just one way they do it.
In cases like, the homebuilder will put their money on the line and offer potential homebuyers below market interest rates or small down payment percentages as an incentive. Only those with the best credit need to consider entering this type of home buying agreement as others will not past the strict financial guidelines involved with the mortgage application process.
