Archive for November, 2009

REO’s can be a great deal

Sunday, November 22nd, 2009

Most banks don’t want to hold an inventory of foreclosed homes (REO’s) so they are priced to sell quickly which usually equates to a good deal.

Looking at the year-to-date sales of Marin County single family homes $500,000 or less (which is the low end for Marin County real estate) the numbers show that REO’s have sold for less than a traditional sale. One thing these numbers don’t take into account is the condition of the property.  Most REO’s need paint, carpet, and minor repairs.  There are no disclosures to speak of on REO’s so it really is buyer beware because you don’t know the history of problems.

Of the 105 REO’s sales year-to-date ($500,000 or less) the average price was $382,000 with an average of 1387 square feet.

Of the 119 sales that were NOT REO’s the average price was $411,000 with 1239 square feet.

Does this mean every REO is a good deal?  No, but be sure to look at them if you can stomach not having disclosures (which usually means you should get more inspections) on your new home.

Put Short Sales at the bottom of your list

Friday, November 20th, 2009

When looking for a new home put Short Sales at the bottom of your list. The reason most Short Sales fall out of escrow is the buyers get tired of waiting for the bank to accept their offer. In most cases it takes months for the Short Sale bank to respond to your offer and then you might find out they want to counter with a higher price.  Or perhaps you have waited several months for the bank to respond they at the last minute a new buyer comes in with a higher offer than yours.  At the very least I hope you keep looking for another “perfect” home while waiting for the bank to respond, and no, it is not legal to write offers on several Short Sales and take the first one that is approved (unless you disclose your intent on all offers).

Maybe everything goes along perfect, the bank accepts your offer and then you find out the sellers have changed their mind.  Rather than go through with the Short Sale they will let the bank foreclose and live in the house for several more months without paying their mortgage.

Speaking of waiting, did you realize that you don’t lock your loan rate until the bank accepts your offer?  This means you may write your offer when rates are in the 4% range and by the time the bank accepts your offer rates may have gone up close to 6%.

Don’t think you are getting a better price on a Short Sale either.  Many times the bank will list the home for a lower price as an REO (foreclosed home) than a Short Sale offer they refused.