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Short Sale Deal
If you are wanting a good deal on a home, consider doing a Short Sale. This means you could offer a lender or a bank an offer on a home that is in the last stages of foreclosure.
Apply for a new home loan (purchase)
Apply for mortgage refinancing (2nd mortgage, equity cashout, remodeling)
The last stage of foreclosure means the homeowner has received a "Default Notice" that has been recorded. Default Notices are given usually when three or more mortgage payments are deliquent.
Just because the Default Notice has been recorded, does not mean homeowners who are involved can't catch up with notes, back taxes, late fees, or other fees and bring the mortgage out of foreclosure. Homeowners often find themselves in foreclosure when problems arise due to job loss, medical problems, or for other reasons.
A foreclosure can be the best low deal around for investment purposes. However, buyers must understand that homeowners could get current with their mortgage debts and pull out of foreclosure until the very end.
The lender who has the mortgage can be more willing to negotiate on a lower price when the homeowner is in the last stage of foreclosure. A lender does not want to loose money or loose extra money on a deal.
It can be in the lender's best interest if the home does not enter into an auction. At auctions, the lender may loose even more money. Lenders and banks usually want to try to make some small profit off the sale and don't want to keep too many foreclosures.
When you call the lender you will need to request the Short Sales packet and you can tell them you want to make an offer. They may ask if you are a real estate attorney. Once you get the packet, it explains exactly what is needed for the Short Sale deal.
Part of the Short Sale involves a real estate agent who must give an opinion on the worth of the home. This can be called the Brokers Price Opinion or BPO. What the BPO says has a big effect on the deal.
It is good for the buyer if the BPO stays low on the value of the home. This helps work in the favor of the buyer to get the home at a better price from the lender. For foreclosure homes priced over $500,000, buyers can usually purchase a home at a very good price.
There are buyers who seek out homes in foreclosures because they make a living doing "Short Sale Deals". It is unfortunate that some homeowners must be in a foreclosure situation due to problems. There are other homeowners who are in foreclosure because they walk away from their mortgage by choice.
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