Are foreclosures good deals?

Are foreclosure sales good deals??

Favorable home prices and record-low interest rates combined with high demand and a severe shortage of available housing have created a highly competitive housing market in California, with nearly six in ten home sales receiving multiple offers, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2012 Annual Housing Market Survey.”

More than half (57 percent) of home sales received multiple offers in 2012, the highest in at least the past 12 years, with each home receiving an average of 4.2 offers, up from 3.5 offers in 2011.

Lower priced homes – typically real estate-owned (REO) or short sales – attracted more multiple offers than equity sales ("normal sales"). Seven of 10 REO sales and short sales received multiple offers, while only half of equity sales received more than one offer.  

It is my experience that REO's ( = foreclosure sales) and even short sales, in good areas with good schools, are not bought at a significant discount - if any at all.  On the other hand, in areas which are less desirable, one can find interesting bargains.  As always, where there is more risk, the price is more attractive.

 

For articles detailing better the draw-backs of such transactions, don't hesitate to send me a note.  - yes, there are draw-backs to REO's and short sales.
Thanks for reading,
Francis  

Silicon Valley Real Estate

useful links

A worthy non-profit: CSA

Short sales in California: fewer than 3/5 close ...

I find it difficult to explain to potential buyers the difficulties that short sale situations pose.  A lot of the time, I give a copy of an article or two describing the problems involved.  - and there are many, many different types of problems.

The California Association of Realtors (C.A.R.) released the results of a statewide survey on short sales and the challenges we as REALTORS® face in working with lenders and servicers.

The most vexing problem is the unresponsiveness of the parties involved in the banks, and the length of time it takes to get anything done.  But let's not put all the blame in one place: it is true that the sheer quantity of files that one given person in a bank has to deal with is a challenge, whoever is there to do the work.  But the differences between banks, departments, locations, makes it really difficult to have a standard approach.  When a second or 3rd loan is involved, which is very often the case, then all bets are off...
“The lack of standardization, long approval process, and lack of lender approvals are hampering what should be a 45-day short sale process,” said C.A.R. President Beth L. Peerce. “Instead we’re hearing the typical response time for lenders is at least 60 days, and in many instances, their response time exceeds 6 months.”

Bottom line, these transactions are not for everyone.  You have to be very patient and go with the flow. You cannot put your heart in the property you want to buy.  You should not expect the succession of events to be logical, nor to make sense necessarily.  And you have to know that it may not go through, even if you, on your end, have done all you could and should do:  fewer than 3 in 5...
Francis
http://www.francisrolland.com/
Silicon Valley Realtor, - since 1985.