The Inside Story About Short Sales, REO / Bank Owned Homes Etc.

Mostly as a result of the recent national decline in home values, many people have found themselves with little or no equity in their homes, in particular those who bought in 2003 or 2004.

Many of these homeowners bought their homes not only with no money down, but with initial interest rates set at artificially low levels ("teaser" rates) as this was the only way that many of these people could meet the monthly mortgage payments.

The "teaser" rates were temporary. After two or three years they were re-set to a more realistic figure. And here we are two or three years later. The idea put forward at the time was that as house values continued to increase, when the time came for the mortgage rate to re-set, the homeowner would have gained so much equity in the home, they could re-finance, maybe again with a "teaser" rate. The reality, as we all now know, is that homes have declined in value rather than increase so large numbers of people find themselves in a situation they can not recover from.

Note that this set of circumstances only applies to a relatively small percentage of homeowners, but the numbers are large enough to have a significant impact on the real estate market.

Short Sales

When a homeowner has no hope of affording their monthly mortgage payment, they may just decide to cut their losses and let their home go. In this circumstance, rather than wait for the bank to foreclose, they make take a ore responsible approach and aim to discuss the problem with their lender in the hope that they may agree to a "Short Sale". This means that the homeowner sells the home and as the net amount remaining after payment of all closing costs is insufficient to pay back the loan, the lender forgives the shortfall and writes it off as a bad debt. The homeowner gets to walk away from the home with no debt but as you might expect, their credit rating will suffer.

Short Sales sound like a great way for a buyer to get a home at a discounted price. After all, the seller really does not care what the sale price is. They just want to put the experience behind them. In reality, buying a home designated as a short sale is not so easy and many of these supposed short sales do not come to fruition. If you want to know what the problems are, let me know and I can provide you with a lot of relevant information.

Bank Owned Properties

As mentioned above, most short sales do not come to fruition and eventually, as a result of foreclosure, the bank re-possesses the home. Banks don't want to own homes so they will then do whatever is absolutely necessary to bring the home into saleable condition and list it with a real estate agent. Although there are certain complications with this kind of sale, such as a lack of seller disclosures and relatively slow response to offers, these bank owned homes are some of the best buys in real estate. They are unlikely to be in top-notch condition and they may need updating etc. but the value is there. Banks have no emotional attachment and their main objective is to dispose of these properties at an acceptable price. I have access to all of the Bank Owned / REOs on the market in Contra Costa and Alameda County and if you are serious about wanting to buy such a property, I can help you find one.

Please note that you will need to have a substantial down payment to buy one of these homes - at least 10% of Purchase Price. You also need to be pre-approved for financing and have a good FICO score. I can, of course, introduce you to a lender who can help with this.

There is a lot more to know about all of these situations than is detailed above. I do have the answers you need and I can represent you in the purchase of such homes. Just send an email to bankowned@bernardgibbons.com or call me on my cell-phone at (925) 997-1585 and I will arrange to meet with you and discuss the way to move forward.