Foreclosures
Columbus, OH 00000

What is a “FORECLOSURE?”

What is a “FORECLOSURE?”For Realtors the term “foreclosure” or “distressed property” represents a spectrum of different types of homes. There are 6 different types of sales that Realtors assume fit within the “Foreclosure” term. I’ll briefly explain in the order in which they occur through the foreclosure process:1.  Short Sales/Pre-foreclosuresA short sale or pre-foreclosure is what you find 99% of the time when searching foreclosure sites on line. About 95% of those homes you find are not listed for sale and are listed as pre-foreclosures. Foreclosure notices are public records and websites that offer foreclosure listings like (RE/MAX, HER, Coldwell Banker, Realty Trac…etc.) are just reporting that the home has been notified that foreclosure proceedings have begun. It may be another year or two before the home has gone through the foreclosure process and is available for sale. Those homes that “are” for sale are called short sales. They occurs when a home owner can no longer pay their mortgage and own more on the home than the home is worth. In this case, The home owner and their agent have negotiated with the bank and the bank has agreed to accept a purchase price “short” of the payoff needed to satisfy the loan. Short sales take anywhere from 2 to 6 or more months to complete. This is because there are so many obstacles that need to be overcome in the short sale process. In short…Pre-foreclosures are not listed for sale. They have only been notified by the bank that they are late on their payments (which is public knowledge and published/syndicated by all Real estate websites offering foreclosure listings). They have not gone through the process of getting short sale approval. Short Sales are those homes that have been notified of an imminent foreclosure and have negotiated with the bank to take a loose on their house. Short Sales are listed for sale.Here is a great link further explaining short sales: http://homebuying.about.com/od/buyingahome/bb/BuyingShortSale.htm2.Sheriff’s Auction.If a short sale cannot be negotiated and the home owner cannot bring the mortgage payments up to date the bank sets in action the foreclosure process. Once a home has been foreclosed on it goes to sheriff’s sale for a potential investor to bid on. The bank attends the sheriff sale and buys the home back if no one bids the home up to the amount needed to satisfy the loan. At a Sherriff’s Sale the best homes go fast and often times the sell for market value or just under market value. The ones you see that sell for a significant amount less than market value usually need a significant amount of work to make them livable. Investors buy these homes to fix up and flip. Homes are usually paid for in cash.3.Bank Owned/REO.If no one bid the home up enough for the bank at sheriff’s sale they will buy the home back. They then list the home with a local Realtor on the MLS and it’s available for people like you to purchase. The bank has no emotional attachment to the home and is willing to negotiate the home down in price more than a home owner because they are not in the business of holding property. Plus they are ready to negotiate so there should be no delay. Their main concern is to get the home off their books as soon as possible. They are more concerned with minimizing their loose. Often times these homes are going to need a little work but the bank will invest money up front before the homes come on the market to winterize and repair and catastrophic issues like roofing or flooded basements to make the home somewhat livable.Here is a great link explaining Bank Owned/REO homes: http://homebuying.about.com/od/4closureshortsales/qt/120507_BuyREOs.htm4. HUD.HUD homes are sold in auction form via the HUD’s website. HUD homes are those homes that have been insured by FHA and bought back from the banks when they go through foreclosure. You need to have a Broker’s license to bid on a HUD home. They work much like a normal auction. In short, this is like the eBay of Real Estate. HUD homes need work. They are usually not as well maintained as Bank Owned or REO’s and take a lot more work on your part in finding them. HUD homes are not usually listed on the MLS. The ones that are, are rarely still available. So it’s very frustrating for us a Realtors to have to tell our clients that the home they want to purse sold 2,3,4… days ago. You can get a great deal on HUD homes. YOU MUST HAVE A LICENCED REALTOR TO BID ON A HUD HOME. Searching for HUD homes can be done on your own but to tour/bid on a property, you need to have a Realtor.Here is a great link further explaining HUD homes: http://homebuying.about.com/cs/buyforeclosures/a/hud_homes.htmTo Search HUD home go to:http://www.hudhomestore.com5.Relo/Corp (non-foreclosure).When an employ of a company is requested by their employer to move out of state they often times will have a company the assists in the relocation. This company works side by side with the Listing Realtor to negotiate a price for the home as close to fair market value as possible. However they understand that moving their employee is much more important than getting the home for a profit so they are often times willing to negotiate a lower price to be “done” with it. The bottom line in a Relo/Corp home is that they have to sell it one way or another and if they get a reasonable offer, even if it’s below market value, they will often times accept it. You can get a great deal on these homes.6.Estate (non-foreclosure).Plain and simple someone has probably died and their heirs are selling the property to split the proceeds. They often times understand that the longer they hold the property the worse shape it will be in so they have a lot of motivation to get is sold.  Pretty straight forward.Buying a Foreclosure is a great way to get a great deal on a new home. However the process is not as easy as you may think. It’s important that you enlist the professional advice and expertise of a Realtor to assist you through the process. Call a Realtor today!!!! We will be happy to help!

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