Pre-Foreclosures, Short Sales, Bank-owned--Buyers Sometimes Lose FOCUS

With SOOO many properties to choose from here in Central Florida (say about 25,000 plus or minus a thousand), a first-time Buyer may lose FOCUS on what they want and need and on what they can actually purchase. Here is basically an e-mail that I just sent to a prospective Buyer that e-mailed me a few properties that she is interested in: (Keep in mind that I have not yet met with this lady but we've had a few good phone conversations and she's e-mailing me the out-of-state lenders info this weekend so I may contact them on Monday--the lender of course doesn't work on the weekends!):

"Well, a few of these are mobile/manufactured homes and I only know of one lender that'll lend money on them b/c they depreciate in value (b/c they are a vehicle, not a house). Plus, you usually need 25% down in order to qualify for that specific loan (if that loan is still even available). Those mobiles are the ones listed on XXX. XXX is bank-owned but it's a big house. If they have the utilities turned on, maybe we can see inside. But banks do not typically pay any of a Buyer's closing costs unless you go over/above whatever they have it listed for. With your lender, I can ask on Monday if you guys need any help with down payment. Do you qualify for any of the Down Payment Assistance programs? XXX is a short sale, meaning they paid $XXX,000 for it and owe more for it than it's worth at this time. It can take a long time for the Seller's lender to say whether or not they'll even accept less than what they are owed for a property; otherwise, the Seller needs to bring money to closing or the bank won't approve the sale. And the Seller's bank DOES need to approve the sale. Yikes!

There are a LOT of preforeclosures, short sales, and bank-owned properties on the market right now. But, if we are choosy, we can probably get as good a deal from an actual Seller that has some equity in their home and can sell their home in a timely manner." Then, I go on to send the inquired-about listings and I'll follow-up tomorrow of course.

So--I am talking with so many Buyers that believe these homes (pre-foreclosures, bank-owned, and short sales) are GOOD deals (and they can be!) but most of the Buyers I come in contact with are totally inappropriate as Buyers for these specific properties. Pre-foreclosures are great, actually, if the owner has equity in the property and can actually sell the property quickly, has no utility liens or other liens on the property, has the utilities turned on so the Buyer can have inspections, etc. They can be quick transactions and everyone is happy. More often than not, though, a pre-foreclosure quickly turns into a "short sale," in which the owner owes more than the property is worth. The tricky question with these is "Does the owner QUALIFY for a short sale HARDSHIP?" In order for the bank to accept less than they are owed, the owner needs to have had a HARDSHIP such as a death in the family, loss of job income, or some other really catastrophic occurence for the bank to just give up on money owed them.

I mean, come on--if someone owed you thousands or tens of thousands of dollars (or more!), YOU would want the money, too, right?? In terms of already bank-owned properties--at least the bank can get back to you quicker if they already own the property, which is good. But they are choosy about not wanting to pay a Buyer's closing costs and the utilities may or may not be turned on; that really depends on the listing agent. And don't even get me started on mobile homes. I live in Florida and, even though it's a personal choice of people to either buy or not buy a mobile home, I personally think it's a bad idea to buy a mobile home due to hurricanes, etc. (That's just my opinion.)

So, if you are a Buyer looking for a deal on a home--and aren't we ALL doing that--please keep the focus on what you want, need, and like so that you can buy a home to live in and not waste your precious time, energy, inspection money, and get your hopes up to buy a home that ultimately just will not work out. Use an agent that will help you sift through all the properties available to find the homes that you WILL be able to purchase. I'm not saying that purchasing certain properties isn't a good idea; what I'm saying is that it takes the right person, couple, or investor to have the time, energy, and patience to buy certain properties. I'm evening seeing CASH Buyers having difficulty in purchasing certain homes, but that's another story.

Take a look at Mark Organek's recent post for more Problems with "Deals": http://activerain.com/blogsview/412648/The-Problems-You-Get

Also, here is Mark's take on why these "Deals" are actually deals: http://activerain.com/blogsview/412652/The-Beautiful-Happy-Joyful

Again, use an agent that has experience in COMPLETING pre-foreclosures/short sales/bank-owned properties and use a lender (or buy with cash) that has experience, too. Good luck!