| With the way things are coming along in the real | | | | distressed property prior to the initiation of foreclosure |
| estate market, it has become a veritable lot of real | | | | proceeding. A short sale may also be undertaken if the |
| estate properties with rock bottom price tags! Off | | | | homeowner losses a significant portion of his equity |
| hand, we can say that indeed we are in a buyers | | | | and works out an agreement with the lender to |
| market. We can dare say that homebuyers never had | | | | dispose of the property to settle his existing mortgage |
| it so good with the increasing number of properties | | | | obligations. |
| being offered at very affordable prices within their | | | | In both home buying opportunities, buyers tend to bid |
| community. Can we then go all out in absolute | | | | for more time and wait it out on the sidelines with the |
| confidence that everything out there promises to be a | | | | anticipation that the price will continue to decline. There |
| homebuyer's dream deal? Unfortunately, this is not | | | | is also this notion that lenders are hard-pressed to |
| always the case. | | | | dispose of their inventory of REOs and will accept |
| The deal takes on a totally different complexion when | | | | bargain offers just to offload these distressed |
| we consider distressed properties. You are getting into | | | | properties. This is just one side of the story, which is |
| a volatile area in the real estate market if you decide | | | | usually the position taken by optimists. |
| to explore your best options among the distressed | | | | However, if you consider yourself as a wise buyer, |
| properties being offered for sale at "bargain" prices. | | | | then you have to look at the "dark side" of the deal. |
| Distressed properties include short sales and | | | | The longer these distressed properties remain in the |
| bank-owned properties. It is important that you fully | | | | hands of lenders, the more they lose their value. An |
| understand the intricacies as well as the dynamics of | | | | REO is a shut down property which makes it |
| deals involving these types of real estate properties. | | | | vulnerable to serious damage and deterioration. You |
| Foreclosed homes are defined as distressed | | | | will also have to contend to an assortment of |
| properties for the single reason that their owners were | | | | problems including moisture issues, vandalism, frozen |
| not able to meet their monthly mortgage obligations | | | | pipes, damaged electrical system, pests, etc. |
| leaving the bank with no other recourse but to | | | | There are a considerable number of distressed |
| foreclose the subject property under the terms of the | | | | properties in perfect state at the time of offering that |
| mortgage agreement. These properties are then sold | | | | quickly turn into a useless pile of ramshackle properties |
| through auction. These foreclosed homes become | | | | after only a few months. So, before you decide to |
| REOs or bank-owned if they are not sold through | | | | wait out until prices will bottom out, you have to |
| auction. | | | | understand that the property will continue to |
| On other hand, a short sale comes about when a | | | | deteriorate at a much faster pace and whatever |
| distressed property is offered for sale at a price which | | | | discount you might have will just be negated by the |
| is significantly lower than what the homeowner actually | | | | absolute degradation in value of the property. |
| owes their lender. In effect, the lender is giving their | | | | You stand to lose your proverbial shirt if you don't |
| imprimatur by consenting to a discounted payoff to | | | | apply good judgment when making a go for distressed |
| close out a problematic mortgage account. Short sales | | | | properties. There are no safety nets or guarantee for |
| happen when homeowners are in default in their | | | | a rundown REOs. Remember the golden rule when |
| monthly payment obligations and opt to dispose of the | | | | buying distressed properties - caveat emptor. |