More often than not there is a buyer at the other end of the phone or an email requesting help in purchasing a foreclosure. Today, I actually received an email asking what’s the best value is, foreclosure or short sale?
It’s been years since a day has gone by without the word “foreclosure” in the morning paper, television news or on the home page of whatever Internet browsers you’re using so it only makes sense that buyers ask about them. Add to that the rumors of great fortunes to be made, awesome opportunities and magical faeries found in kitchen drawers of foreclosures.
Everyone seems to know “someone” whose neighbor’s, college roommate knows met who allegedly purchased real estate, for “a song” (no price mentioned), in pristine condition with the appliances and light fixtures actually still in residence. Rumor also has it that there was a chive and cheese soufflé in the stainless steel oven and Pouilly Fuisse chilling on the counter, too.
While I have actually seen that rare animal of a veritable walk-away foreclosure, it’s not exactly the norm when it comes to many foreclosure purchases. Some homeowners become a little bitter on their way out the door and have been known to Craigslist the innards of home before they bail.
For standard consumers who start out as foreclosure buyers, sweat equity is a noble investment until it involves a hazmat suit or commercial grade air scrubbers. Everyone is into a fixer upper until they realize it’s more than just new Berber carpet and a trip to the Lowe’s paint department.
Biohazards and other peoples DNA scattered about have a way of making short sales look mighty attractive. There’s something to be said for a home with the air conditioner still on and quite possibly someone living in it caring for the home.
Most of the “I’m looking for a foreclosure” buyers are really looking for a good, sound deal and they should be. The difference is getting value in their purchase versus just a low price.
Foreclosures aren’t necessarily the best possible deal for all buyers. Put into perspective that the banks/investors do get appraisals on their assets and don’t necessarily sell them under current market value. Those properties are also listed at a juicy price to stimulate an offer. This often results in multiple offers, so there is a good chance a buyer will be asked to revise their offer to the highest price and best terms which can actually be over list price. Silent auctions … they’re not just at charity events for a bag full of Pings.
Foreclosures may have waiting or “first look” periods for “owner occupant” buyers so while investor buyers or second homeowners can place an offer on the property, the offer may not even be considered until the waiting period expires. Since inventory is being absorbed, fewer properties have been making beyond the waiting period, especially in the price bracket of $400,000 and under, which accounts for about 75 percent of our closed sales last month.
Don’t forget that equity sales are still an everyday occurrence out there. Last month, as a matter of fact, 66 percent of the closed sales were equity sales which did not involve a bank or third party approval.
Unless a buyer is a rehabilitating real estate to flip, most consumers should still be investing their time in researching the neighborhood that fits their lifestyle and then make a decision to purchase real estate there. They can then negotiate the best possible deal for the current market conditions whether it’s a short sale, equity sale or a foreclosure.
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Chris Griffith is a real estate agent at Downing-Frye Realty Inc. in Bonita Springs. If you have a question about local real estate or Bonita Springs, e-mail her at chris@LifeInBonitaSprings.com.