Purchasing Foreclosures & Short Sales

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Your Choice is Crucial!

Are you looking to get a great deal on a Foreclosure or Short Sale?  In this buyers market, it is imperative that you align yourself with a realtor who specializes in DISTRESSED properties and who can help you navigate the many pitfalls of the foreclosure and Short Sale process, from a buyers perspective.

What is a REO vs Foreclosure?

A REO (Real Estate Owned) property is simply what most people refer to as a Foreclosure.  The term REO comes from an accounting term OREO which stands for Other Real Estate Owned property.  It is a "balance sheet" term that banks use to classify their non-earning assets for purposes of accounting.  All you need to know is that a REO, OREO or Foreclosure are all pretty much the same thing, which is a property that has been taken back by the bank due to lack of payment.  Take a look at our Foreclosure lists to the right.  If you are Serious about getting the best deal possible, take a look at our Foreclosure Video below and then be sure to sign up for our Property Notify to get the most accurate and current MLS Foreclosure lists available.

Foreclosure Process

When a person stops making payments on their loan and decides not to try and short sale their home, the bank usually will foreclose on the property.  The bank must follow a set of legal procedures, specific timelines and notifications to foreclose on a home.  When the final trustee sale occurs, the property is usually offered for sale at a public location, typically the county court house steps.  Most people think this is the best place to purchase a foreclosure.  It is NOT!  First, you must have CASH!  Not a check but CASH or Cashier's Check.  Second, you probably have had no real chance to do any due diligence or investigations on the property.  What condition is the structure, roof, plumbing, electrical, utilities....and so on?  Third, it can be very difficult to ensure a clear title.  Are there any encumbrances, liens, judgments, or easements on the property?  Since there is no official escrow process, many of your rights and abilities to investigate the property are surrendered.  As you might have guessed, this can lead to some huge issues down the road.  This is why most foreclosure properties are not sold at auction, but are just taken back by the bank.  By the bank taking the property back and then listing it on the MLS, it allows a great advantage to the buyer to purchase a Foreclosure with a contract and a Realtor representing them.   Now, the buyer is able to enter into a legal purchase agreement with the bank that includes several buyer rights, time frames and contingencies.  In most cases, you are allowed to perform all the due diligence and investigation you want.  The property is also sold through a title/escrow company that insures clear title, eliminating the need to worry about past judgments that may cloud the title or ownership.  The best part is, you do not pay any commissions for the realtor services.  All the commissions are paid by the seller just as they are with any traditional sale.  We represent you and your fiduciary interests and negotiate for you.  Our job is to find you the best deal possible and negotiate all your wants and needs successfully.  If you close escrow then, and only then, does the buyer's agent and the bank's listing agent get paid by the bank.  There are absolutely no commission fees paid by you the buyer!

Sounds Great, what's the Catch?

There really is no catch but more of a caveat!  Foreclosures are very competitive.  The bank's foreclosure departments are under staffed and overwhelmed!  Often times the banks are pricing homes below market value to solicit quick offers and a speedy escrow time frame.  Since most of these banks are pricing these properties to sell, it is very important that serious buyers are well educated with accurate information and inventory data.  You as a buyer really need to have accurate and timely information, when competing with dozens of other buyers and investors.  Unfortunately there is a learning curve and most buyers don't realize this until they have been beat out 3-4 times on great deals.  We see this happen all the time.  We really try and educate our clients on the most accurate and timely ways to research and view foreclosure data.  Those that heed our warnings and take our advice are getting some amazing deals!

Short Sale: Devil is in the details!

Do you know how to purchase a Short Sale?  Do you know what a Short Sale is, and how they work?  Do you know how to find Short Sales?  In this buyers market, it is imperative that you align yourself with a realtor who knows how to navigate the many pitfalls of the Short Sale process, from a buyers perspective!  Our office handles many Short Sales for both Buyers and Sellers.  We are in constant daily communication with several banks and asset management firms negotiating Short Sales.  We are experts in the Short Sale process and can help you every step of the way.  Take a look at our Short Sale lists to the right.  If you are Serious about getting the best deal possible, take a look at our Short Sale Video below and then be sure to sign up for our Property Notify to get the most accurate and current MLS Short Sale lists.

Short Sale Warning!

First, from the buyers perspective, there is nothing "SHORT" about a Short Sale.  Purchasing a short sale can be very frustrating,  testing, maddening,  and wearisome.  The process can take upwards of 6-9 months only to fall apart at the last minute leaving you (the buyer) at square one and with several gray hairs.  If you don't have a professional "Short Sale" Realtor representing you and also representing the Sellers, you can have a horrific experience that will forever turn you off the Short Sale market!  Okay, now with that said why even bother with Short Sales?  Because there are some very good deals to be had!  Banks know all too well how expensive the foreclosure process can be and are becoming more and more willing to negotiate with buyers and their offers.  If you have a dedicated, experienced, and seasoned Realtor who is intimately involved with the Short Sale process, you can have a successful close in a matter of months.  It really comes down to the specific property and it's circumstances.  As a professional brokerage who specializes in many short sales each month, we know the right questions to ask before we suggest making an offer.  How is the property priced?  Is the listing agent an experienced Short Sale negotiator?  Does the seller have a second or third mortgage?  What bank holds the note?  All these questions will play a huge role in the success of your Short Sale escrow.  We know which Realtors are closing Short Sales and which are not.  We understand the current legislation and how it plays a roll from the buyers perspective.  We know which banks are easy to work with and motivated to negotiate, and which ones are not.  We don't just throw out offers on your behalf and hope they stick 9 months later.  The "doom and gloom" you hear about buying Short Sales can normally be avoided with competent Realtors and willing banks.  There is a method to the Short Sale madness and we are experts at it.  We do this every day for our clients and we would be happy to do it for you.   

What is a Short Sale?

Simply put, a Short Sale is when a bank is willing to take less money for a property than what is currently owned on the property's loan or note.  When a seller can no longer make their mortgage payments and wants to avoid foreclosure, another option is a Short Sale.  The seller (normally with a realtor) puts the home for sale to solicit an offer.  Once the sellers accept an offer from the buyer, then the offer is submitted to the bank for approval.  This approval process can take several weeks if not months, and go through many counter offer and addendum phases until the bank and buyer are happy with all the terms of the contract.  It is during this process that the two Realtors earn their money!  They are in constant communication with each other and facilitating massive amounts of paperwork sending in contracts, forms, seller financial information, tax returns, financial summaries, market analysis, closing statements and a whole host of other documents (often several times), depending on the bank and competency of the bank assigned negotiator.  If and when the buyers and sellers come to terms, the bank then issues its approval and acceptance.  Then and only then does the real escrow process begin.  At this point the escrow takes on many aspects of a traditional sale and both agents and parties work to get the escrow closed. 

Why would a Seller do a Short Sale?

There can be several reasons why a seller would decide to do a Short Sale.  There is Senate Bill 931 which aims to prevent banks from pursuing sellers on All first mortgages of residential dwellings (1-4 units) for deficiency judgements.  There is the Federal Mortgage Debt Relief Act that expires at the end of 2013 that generally may allow  federal exclusion on income realized as a result of a short sale or foreclosure in the event the bank issues the seller a 1099.  Then there is the credit issue.  Both a Short Sale and Foreclosure will more than likely affect the sellers credit.  With that said, if a seller is proactive with a Short Sale, they may be able to successfully close a sale with fewer 30/60/90 day late penalties, thus lessening the impact on their credit and recovery time.  Also in the typical Short Sale that has delinquencies, we are hearing about a 2-year recovery time to purchase a home again.  The foreclosure situation can be 5-7 years to recover.  For the seller in a Short Sale it can be a lot less stressful, as the Realtor takes on most the stress and frustration negotiating with the bank on behalf of the seller.  The seller nor the buyer pays for any commissions to the Realtors.  The Realtor fees are paid by the Bank.  For these reasons, both sellers and banks are increasingly more motivated to try and do Short Sales.  The result of these Short Sales, if approached correctly, can be some amazing deals not likely to be had until the next real estate cycle!

Our MLS Short Sale Searches and Custom MLS Portal

Most of the Short Sale as well as the Foreclosure lists you find on the Internet are horribly inaccurate!  If you want accurate Short Sale and Foreclosure searches and lists, you have found the right place.  Most internet sites use a third party IDX console to search listings.  Most of these IDX consoles utilize a FTTP service that is provided by our local mls (multiple listing service) for free.  The problem is, the FTTP service does not allow the third party IDX to search each a specific metric (Short Sales or Foreclosure being two of them).  In order for an IDX console to be accurate and search specifically for short sales and foreclosures, it must apply for a "RETS" feed from the MLS.  This RETS feed can be costly and an invasive process, therefore some third party IDX consoles do not opt for a RETS feed.  What does this mean in plain English?   A lot of the searches that are provided on the internet for Short Sales and Foreclosures are NOT ACCURATE!  You may be seeing data that is out dated, not accurate or even sold. 

The IDX console we provide here on this site, has a RETS feed with our local MLS.  It is much more accurate than other IDX consoles.  The data is refreshed about every 24 hours. Please feel free to click on any of the Forclosure or Short Sale Searches to the right, as well as any of the Search All, Custom, and Unique Searches provided above.  Our Searches are not only fully customizable, but very accurate.  

However, If you would like to have a "REAL TIME" Portal directly from the MLS, we can set you up with a custom MLS portal of your very own.  You will see Foreclosures, Short Sales and traditional Listings even before most agents do, We can enter your basic criteria into the MLS and set you up on your own custom MLS portal that can be specific to Short Sales or Foreclosures or traditional listings or all of the above.  This information will come directly from the MLS, which is updated many times a day.  Whenever a new listing is input into the MLS by an agent or when a price is increased or decreased on a property that matches your criteria, you will be emailed. If you are serious about purchasing property in this market, this is by far one of the best notification process you can have!  You need to see the inventory and great deals before anyone else does!

This service is absolutely FREE to our clients and carries NO obligation.  We can custom tailor your criteria and change it anytime.  We can have this portal set up in minutes and you can be reviewing property immediately.  All that we ask, is that if you see a property you are interested in, you please contact us and give us the opportunity to represent you.

If you are interested in receiving this Custom MLS Portal then please CLICK HERE.  This link will take you to our "Property Notify" portal request form, and we will have you set up in no time. 

After you enjoy our MLS search links and have your Custom MLS portal set up, if you have any questions what so ever, please contact us.  We are available online to chat, via email or by phone 7 days a week.  Feel free to contact us anytime with any questions or concerns what so ever.  We are professional, we do this every day and  we are here to help you!

Get Legal and Tax Advice

As Realtors, we cannot give legal or tax advice.  The above opinions and statements are general rules of thumb and are subject to change.  We, here at Merrill & Associates Real Estate, try and educate you with all the facts available and keep you informed to the best of our ability.  Traditional Sales, Foreclosures and Short Sales can be very complicated.  We ALWAYS recommend consulting an Attorney and Accountant to get  legal and tax advice for your specific situation.  We would be happy to recommend a local Attorneys and CPAs for you to speak with.

Real estate listings provided by the CRMLS are marked with the IDX logo and detailed information about them includes the name of the listing broker and listing agent. Listing Broker has attempted to offer accurate data, it is deemed reliable but not guaranteed. Buyers are advised to confirm all data provided. Real Estate information being provided is for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Real Estate information has not been verified, is not guaranteed, and is subject to change.