As we finish this incredible year and get ready to capitalize on next year, I want to share some insight and experience. I hear people all the time say they only want to look at foreclosures. They want a good deal so they think foreclosures are there only path. There are also the people that only want "Short Sales" at 50% of ARV (After Repaired Value.) The good news is there are Realtors promoting themselves as Foreclosure and Short Sale specialists. Also, one in four houses on the market right now fall in this category. The bad news is these are usually not the best deals!!!
Before I go further, let's make sure you understand the difference. A Pre-Foreclosure is a situation in which the bank is foreclosing through attorneys but the deed is still in the owners name. If there is equity, the seller can sell and pay off the bank. If there is not equity, the bank can choose to accept less than the payoff so the bank doesn't have to foreclose. The bank will also pay the Realtor fees and closing cost. This is a "Short Sale." The bank accepts "Short" of the notes value. If the bank does foreclose and take the deed to the house, this is a "Foreclosure. This bank owned property is actually called an REO (Real Estate Owned.)
Okay, so now you know the three main types of distressed deals in our market. Here is the scoop. When banks list properties, they almost always list them at fair market value. The problem is houses which sell in a buyers market at fair market value are usually in top shape. A house that has been in foreclosure is usually always neglected. It's not updated, it wasn't kept up and its being sold as is!! Yet the bank wants the same as the beautiful house down the street. If it doesn't sell, the bank will lower the price slowly until it does. All the while sitting there vacant getting in even worse condition. Okay, that is the supply side (yes of course we are back to supply and demand.) Now the market (the buyers) is looking for deals and they think foreclusures and short sales are the way to go. So a lot of times there are multiple offers on these "distressed" properties which drive the prices up.. So many Realtors are struggling so they just want deals.. A lot of them honestly don't know what a good deal is.. Remember, the average Realtor sells two houses a year. So how did we capitalize on this all year? By finding the best houses in the best neighborhoods which are still owned by sellers w/ equity. Then using all of this criteria to persuade the other side to take our lower offers. My clients bought nice houses this year at discount prices..
I could go on with many examples and scenarios but just call me and we can discuss your best path. Also, if you are selling your house we can find the people to pay top dollar!! They seem to be everywhere. We did this all year as this is our best year in real estate!! Forget the media!! Get around the successful people and look at the numbers. Don't follow the crowd as the main ingredient to success is doing the opposite of the majority. Please warn your friends and family as we are still working by referral and sincerely appreciate our clients.
P.S. A recession is a terrible thing to waste!!!