About Grand Traverse County, MI

I am constantly reading posts about short sales and bank owned properties (referred to as REO's in the biz). Often there is a big misconception that the two are similar. This is not really the case.

Briefly a short sale occurs when a property is valued less than the balance owing and the Seller requests that the mortgage holder accepts less than the full balance owing. In that case you purchase from the current owner. In a REO you are buying from a seller (the Bank) who generally just got title tot eh home via the foreclosure process.

Here are the key similarities and differences:

1. TIME - Short Sales can take a lot of time simply because a great deal of care is put into determining the value of a home before a lender will agree to release an existing mortgage. You can plan on 3-12 weeks for an answer. With an REO property it is generally no different than submitting an offer to any other buyer. Expect about 1-7 days for an answer.
   
   Keep in mind that a short sale can be done prior to a foreclosure, after the foreclosure process has started or during the redemption period. That said a short sale may not actually be due to a foreclosure. It could simply be a hardship on the part of the Seller as well as a decline in property values in a given area. The further alone it is in the foreclosure process, the quicker the process can take.
   
2. CONDITION OF THE PROPERTY - Generally since a short sale is occupied by the Seller who needs to sell, you can expect the condition of a Short Sale to be much better than an REO. Because REO properties are the result of the foreclosure process, you can expect that the condition of the property will be less than perfect. Rarely are they pristine.
   
3. DISCLOSURES - With a Short Sale you will generally be buying a home that is being sold "as is". Since the home is lived in and the Seller is available to answer questions, a disclosure statement is often times available. Due to the Seller getting no money from the sale, don't expect a Seller to pony up money if you find a problem upon inspection.
   
   With an REO you buy from a lender who knows nothing about a property and will not provide a disclosure. Many times these homes were taken back during the winter months and despite winterization, you an expect frozen or broken pipes. This is due to the gap between the power being shut off and the winterization which is generally 30-60 days after the end of the redemption period.
   
4. PURCHASE PRICE - In either case you can expect to save anywhere from 10% - 30% off the retail value of a property. Short sales are generally not quite as good a deal due to the lender's loss but if values have dropped in an area you can get some great values. With REO's the lender generally wants the property sold immediately and will be willing to offer a discount based on the property conditions.
   
5. DETERMINING VALUE - In both cases a BPO (Broker Price Opinion) is generally ordered to determine the current market value of a property. BPO's differ from a full blown appraisal in that an appraisal is done by a licensed appraiser whereas a BPO is done by a real estate agent who is not a licensed appraiser.

Feel free to contact me if you have any questions regarding short sales or foreclosures.

It's Simple... You Can't so don't even try! I hear so many agents say that their buyer is "waiting until we hit bottom" and I want to scream. On the grand scheme we are as close to bottom as any of us will ever see (at least in the Grand Traverse Region). So what if prices drop a little bit more, you'll be able to say you got in near the bottom.

If you think about it interest rates are as low as we have seen in decades, prices are as low as I can remember and sellers are motivated. Financing is readily available though Rural Development, FHA, VA and other government programs. Income is not an issue if you had pretty good credit.

On top of that you may qualify for a "First Time Buyers" Tax credit of up to $8,000.00. I was at Huntington Bank this week and saw a poster telling customers about the tax credit. Funny thing is it never mentioned you didn't have to be a first time home buyer. As long as you haven't owned a home in the past 36 months you may qualify.

That money can be refunded this year simply by amending your 2008 tax return and you will get your check shortly there after. It is a great way to get into a home now. Visit www.FederalHousingTaxCredit.com for details.

To get started you must educate yourself on the market. Ask your REALTOR to set you up on automated emails so you are aware of properties that meet your needs as soon as they hit the market. Automated emails are a great way to know what new properties are available before most of the general pubic is aware of them.

Also be sure you have been pre-approved for a home loan or have proof of funds if you plan to pay cash. This is vital if you buy a Bank Owned home or REO as they are referred to in the business. Banks will not look at offers with out a pre-approval letter. Talk to and work with a professional and your transaction will go much smoother and take a lot less time. AS usual I am available to assist you so feel free to call me at 231-218-5199.

As I celebrate my 21^st year in business I look back and think...Wow it has been a long time. I also can't help but notice a lot of changes in the past year. Despite the economic downturn I have seen a huge increase in my business. A large portion of those are foreclosure related (Bank owned, pre-foreclosures, short sales, etc). Any while the almost "Seller's Market" feel of those sales, I am seeing a backlash.

That backlash is appraiser's inability to find suitable comparable sales to justify a ready willing and able buyers offer to purchase. In the past 3 weeks alone I know of 1 buyer who wrote 3 bottom lined offers, had financing approved thought he VA and all 3 were rejected due to the inability to get a suitable appraisal. I know of 2 others this past week.

Even when we have what appears to be a "done deal" with a strong buyer, willing seller and executed purchase agreement...don't couldn't it done until you cash the check.

There are no bigger buzz words in real estate today than "Short Sale" and "Foreclosure". Everyone wants to buy one of these two gems because they believe that they are the best deals on the market.

You might be surprised to find that this could not be further from teh truth. Although, there are many great deals out there in these two categories, there are equally as many great deals in the market that are not short sales or foreclosure properties.

If you are interested in pursuing a short sale or foreclosure there are some things that you shoud first take into consideration:

Once you make an offer you wait weeks, sometimes months to get a response. Not having an answer can be stressful.

You have no real idea what you are buying. You won't get any information. You have no history on the house. Is there something hidden about its condition? Even inspections do not reveal everything. You could be buying a money pit.

These home sare customarily sold "As Is" and most lenders do not make any repairs to the homes before they close. Many times there has been significant damage done to the homes by the previous owners that will result in costly repairs.

The closing process can take month.

The lenders do not return the signed documents sometimes for weeks. Meanwhile you don't have an executed contract. Lenders can and sometime do change their mind and refuse your offer after accepting it. There are usually pages of lender addendum's that will accompany an accepted offer and ALL of these documents are in the lender's favor and will usually allow them to accept other offers up to the day of closing. Again, this leaves you not knowing if you really have a deal.

The one thing that we can be sure of when dealing with Short Sales and Foreclosure properties is that they are setting the market value of homes. When Realtors educate their sellers to these facts, motivated sellers will price their homes in accordance with this new information.

The lesson to learn here is that there are many real "Bargains" out there that are well maintained, have an available history, have fair, realistic market prices and motivated, realistic sellers.

Christine Stalsonburg, Realtor

Coldwell Banker Schmidt Realtors

"A Tradition Of Sound Advice"

231-944-0854

www.stalsonburg.com

www.northernmichiganrealestatecs.com

So the big question is how many foreclosure homes closed in May 2009 in Traverse City? 26 homes out of 88 were tagged as foreclosure or bank owned in Traverse City for May 2009. That represents about 29%. The better news is right now if you complete a search for foreclosure and bank owned homes in Grand Traverse County, there were only 74 such homes available as of June 12, 2009. That means that there is less than a 3 month supply of foreclosure/bank owned homes on the market today in Traverse City Michigan. With the number of foreclosures starting to perhaps taper off, there could be a chance that prices may begin to climb again in the near future. Please see below the diverse mix of foreclosures in Traverse City Mi: