Facing Foreclosure or Negotiating a Short-Sale? Watch this Video

If you're facing foreclosure or trying to negotiate a short-sale, this video clip is a "must-see".

(If you don't see the video below, click here)

Hat tip to zsaw.com (aka @zsaw on Twitter)

The Type of Property You Can Buy May Depend On The Time You Have

Many home buyers start seriously looking for a new home about three to six months before their preferred move date. Some give it even less time. But is two, three, even six months enough time? And does it affect what type of property you can try to buy?

Six, three, even two months may give you enough time to search for a new home, write and offer, go through the negotiation process, come to an agreement (ratify the contract) and then proceed to settlement - IF the property is a traditional resale or bank-owned (foreclosure). But it may not be enough time for a short-sale.

Though the time from which the offer is ratified to when settlement occurs is similar regardless of what type of sale it is, the negotiation process varies drastically especially when it comes to short-sales.

Here's the breakdown…

Traditional resales

A traditional resale is a sale in which the property is not bank-owned nor is the seller attempting to do a short-sale (definition of a short-sale later in this post). The owners are selling it directly to a buyer without needing final approval from a bank or other creditors.

Traditional resales typically take anywhere from a day to a week from the time you present an offer to when the negotiation process is complete.

If you've given yourself between 3 and 6 months, you'll be fine even if you don't get the first or even second or third house you've made an offer on.

Bank-owned properties (aka "foreclosures")

Bank-owned properties have been foreclosed on and are now being sold by the bank on the open market.

Bank-owned properties typically take a few days to two weeks to negotiate. The reason for them taking longer than a traditional resale is that you're dealing with the bank's asset manager - they have hundreds of files on their desks at one time and they don't work nights, weekends or holidays.

If you've given yourself between 3 and 6 months, you'll be fine even if you don't get the first or even second or third house you've made an offer on.

Short-sales

Short-sales are situations in which the seller/borrower is attempting to sell the property for less than what is owed on it (they're "short") and the seller/borrower is trying to get the bank/creditor to agree to take the loss. The bank/creditor must give final approval on the offer in order for the deal to take place. (For a more detailed explanation of what a short-sale is, click here)

The average response time from the bank on a short-sale is 3 months though I've seen responses take as long as 6 months. And here's the kicker…only about 20 percent of short-sales are approved.

If you've only given yourself 2 to 3 months before having to move, you're outta luck - short-sales are not for you. Even if you've given yourself 6 months, you may be cutting it close because it may take the full 6 months to hear a response. But…if the bank doesn't approve the short-sale, you're back to square 1 and you've lost an average of 3 months (if not more) of house-hunting time. 

If you'd like to look at short-sale properties, you should give yourself enough time to find a home PLUS another 4 to 7 months (average response time plus time to close).

The home buying process is stressful for many - especially first time home buyers. The last thing you want to do is feel rushed or, even worse, find yourself having to double-move or living out of a hotel. That's why knowing the timing involved with each type of property and planning accordingly is so important.

Loudoun Bank-Owned, Short-Sale Properties Make Up 25% of Inventory

Bank-owned and short-sale properties currently make up 25 percent of the active real estate inventory in Loudoun County (including new homes/new construction lots for sale).

Is this is a good or bad thing or neither?

Back in October of 2008, the percentage of bank-owned and short-sale properties as compared to the total inventory was 39%. But that percentage has since dropped and has been holding steady around 25 percent for some time now. 

That's a good thing in one way because we've seen the percentage drop and we're not seeing an increase (which would mean further downward price pressure). It's not a good thing in another way because we're not seeing that percentage continue to drop below 25 percent (which is key to a real recovery).

Another good thing is that the overall real estate inventory is Loudoun is dropping and is at its lowest level in years. I'm just curious as to if/when the next wave of foreclosures will come and how big it will be if it does. That depends on a lot of things including interest rates, the stimulus bill's effectiveness, loan modifications, the overall economy, etc.

So basically, we're better off than we were last year and we're doing ok for now. But cross your fingers.

LoudounForeclosures.com Update

You may have noticed that there are some issues with the Category section of the blog, as well as some of the widgets on the very right hand column. I am currently working with Typepad and the makers of the widgets to resolve the problem.

Sorry for any inconvenience this may have caused you and I hope to resolve the issues shortly.

On a related note…look for some changes coming to LoudounForeclosures.com and LoudounScene.com in the near future. The changes are being made in order to make your experience on the blogs more efficient, rewarding and pleasurable.

-Danilo

Fastest, Easiest Way to Search for Loudoun Foreclosure/Bank-Owned Properties

The best and easiest way to search for foreclosures/bank-owned properties in Loudoun County is by using FranklyMLS.com, a "wiki" style, DC/MD/VA real estate search site created by Frank Llosa.

Here's how you use the site (4 easy steps)…

1. Go to FranklyMLS.com/Danilo
2. Enter "Loudoun bank active" next to "Search for" (located at the top of the page)
3. Choose your price range (or choose "no min" and "no max" for a list of all of them)
4. Click "Go"

Voila! A list of foreclosure/bank-owned properties within your price range in Loudoun will appear on the page. You can sort them from max price to min price or vice versa.

(Click here to see an example of a search for "Loudoun bank owned active" with no min or max price)

Now, let's say you're only looking for bank-owned properties in the 20164 zip code… Just insert "Loudoun bank active 20164" into the search field and you'll get filtered results that are only bank-owned properties in that price range in the 20164 zip code.

You can do the same with any keyword based on your search criteria - "Ashburn", "20148", "detached", etc. It's that simple.

Would you rather just get email alerts than go back to FranklkMLS.com all the time?

No problem. After you've entered your search criteria at the top of the page and clicked "Go", just go to the bottom of the page, enter your email address and click "Sign Up/Retrieve" - you'll get updates on new properties that come on the market as well as properties that had recent price changes. (No, your email address will not be used to spam you or be sold or rented to third parties)

For more information on how to use FranklyMLS.com and its various features, you can also check out this video tutorial.

If you have any questions about how to use the site or about a property you come across, just contact me and I'd be glad to help.

Related Posts

FranklyMLS.com versus new HomesDataBase.com

Foreclosure Eviction Gone Really Bad

There are plenty of horror stories being told amongst agents that work with foreclosed properties and local law enforcement officials that help with foreclosure evictions. But this story tops the list…

A New Mexico couple decided that they didn't want to be leave their home, which was being foreclosed on. They loaded up with guns, ammunition and homemade bombs and fought off Otero County Sheriff Deputies that initially tried to serve the foreclosure notice.

Then they got into a gun battle with nearly 100 members of the New Mexico State Police SWAT team. The story ends with the husband dying and the wife being dragged out of the home by the bomb robot.

If you can't see the video, click here.

Hat tip to The Real Estate Bloggers

Fannie, Freddie Extend Foreclosure Eviction Freeze & Launch Rental Program

Fannie Mae and Freddie Mac put a freeze on foreclosure evictions through January 9, but have decided to extend the date to March.

In addition, Fannie and Freddie are launching a program that will allow qualified owner-ocupants and renters the chance to rent the property back from them on a month-to-month basis at market rental rates.

Fannie and Freddie are allowing renters in homes owned by Fannie Mae and Freddie Mac that have been foreclosed to remain in the property and enter into a month-to-month lease. The program also allows troubled owner-occupants who have been unable to modify their mortgage a chance to lease the property after foreclosure takes place.

Though I applaud Fannie and Freddie for launching the program that allows renters to stay in the property because their landlords (the owners/borrowers) have been foreclosed on (and I hope private lenders follow suit), I don't necessarily agree with allowing owner-occupants/borrowers to rent the property back after they've been foreclosed on.

That may sound harsh, but hear me out…

Many people are just walking away from the mortgages and homes because they don't feel like paying their mortgage and/or are upside down and don't want to wait for the market to rebound to get their money back - even though they're fully capable of paying their mortgage in full and on time. These people are abusing the system (imho).

Once these people hear that they can walk away from their $3000 per month mortgage and rent the property for $1500 per month without ever having to pack a box or move a thing, what do you think they'll do?

Unless Fannie and Freddie are strict and only give the very "qualified" borrowers/owner-occupants that chance, the program will get abused.

I would like hear what Fannie and Freddie mean by "qualified owner-occupants", something they haven't released details on yet. 

Source: MarketWatch.com and The Wall Street Journal (WJ.com)