It happens that 2008 to 2012 was one of those times with a plethora of short sales, foreclosures, and REOs. As a shift in the market occurs after difficult economic times, then Tact #11 of Keller’s SHIFT becomes critical: master the market of the moment.
In many markets, whether a financial depression or buyers being pushed out of the market, short sales, foreclosures, and REOs are viable options. To be sure terminology is understood, please refer to the following as stated:
- Short Sales are homeowners in default and trying to avoid foreclosure and will put the house on the market at better pricing that typical sellers.
- Foreclosures occur when a homeowner loses their property because of overdue mortgage payments that the bank can no longer manage.
- REOs occur when a bank has an above average number of houses in foreclosure.
Stage One: Default
When a borrower does not make their mortgage loan payment and falls behind, they are in default. The foreclosure process usually starts within thirty days after the due date is not met. When a homeowner works with their lender, a temporary suspension, reduced payment, loan modification, or short sale may occur. To save their credit history, default owners who short sales will have a better outcome than if they wait for a foreclosure.
Stage Two: Foreclosure
When a lender and homeowner cannot cure the loan, the home is foreclosed and is under the ownership of the lender. At this junction, the homeowner may repurchase the home at auction or in the redemption period. Otherwise an investor may purchase the home.
Stage Three: REO
When a home is unsold at auction it becomes “real estate owned” and is then a liability on the lender’s books. REOs are marketed for resale with a real estate agent, who works with a REO agent to handle the home’s buyers.
Understanding each state of a home’s ownership can assist you in finding feasible financing options for listings that would otherwise be unattainable to a buyer. These properties may represent a chance to land deals below market value and help build your reputation as a professional who truly looks out for client’s financial health and housing needs at the same time.
For more ideas about real estate transactions, feel free to visit our blog page to learn more.