Deal or No Deal

The market is definitely picking up. Most of the single family inventory under $150,000 is moving quickly especially if it is in good condition. If the property is a bit more "challenged" under $100,000 the buyers seem to be standing in line.

Now that said, what makes a good deal for a buyer? It all starts with you, what do you want? I am getting phone calls from buyers that say "show me foreclosures and short sales". Great, but do you know the difference? Because those may not be the best deal out there.

Foreclosure: that is where the bank has already taken the property back through trustees sale or deed in lieu (that is where the owner basically signs the house back to the bank). The banks are motivated to sell HOWEVER they are not doing this blind. They have had usually multiple BPO (broker price opinions) and at least one appraisal. The bank knows where the market is. They may be slightly more aggressive in pricing but rarely are they going to drop 20% below list on an offer, especially if they just listed the property for sale. These properties are As-Is and will include lengthy addendum that favor the bank if you proceed. Read everything before you sign.

Short Sales: These properties are a bit more interesting. The seller/owner still owns the house, the market value of the property is less than what is owed to the bank, so in order to sell the seller must have permission from the bank to sell at the reduced price. This is not an easy process. The seller must demonstrate financial hardship, their lender will do a BPO and an appraisal and the file must go to review. This is after an offer has been received . This process review by the seller's lender can take months. If there is a first and a second note, both lien holders must approve the sale. So if you are in a hurry to purchase, this may not be your best bet. Also, the property is usually sold As-Is because there is little or no money for repairs.

Your final option as a buyer...the traditional "normal" seller. Yes, they are out there and pretty aggressive in trying to get their property sold. You can negotiation price, repairs and closing date where as you may not be able to with Foreclosures or Short sales.

In a nut shell, don't limit yourself to just short sales & foreclosures. Look at the inventory in your price range, sharpen your pencil and get ready to move.