Claire31

We are looking to move to Southern California next year and will probably rent at first and then buy a property. I have heard briefly about foreclosure and short sale properties but am not clear on what they are and what the difference is between them.

I would really appreciate any advice on more details of what they are and the pros and cons of buying these types of properties. Also whether you think it's worth the hassle of buying these properties

Many thanks

Michael

Even in the best of times to purchase short sales, short sales were very time consuming and undeterminable. With California's current housing boom in housing prices, lenders are not going to give a deal when housing is in very high demand since they can easily sell properties at market price.

So don't expect that you are currently going to get a good deal just because a short sale or foreclosure is in progress unless you live in areas in the inland valleys such as Stockton where there is still a large supply of housing.

Poppy girl

We just bought in NV and were looking in Northern CA when we lived in Grass Valley and there was nothing, and if it was a short sale it was a dump and we were advised against it so we did not bother to pursue the venture, they are more difficult to find then you think, yes you see thousands listed but they are either sold or under offer, I would personally advice you to get a great realtor one that will be in contact daily and at the drop of a hat to do a viewing, one that will also be on top of his game and shot you the details of all new listings as they hit MLS, some are lazy and just send listings computer generated each morning useless......

Good Luck.

Claire31

Thank you for your responses. Any advice on how to getting a good realtor would be much appreciated

Poppy girl

Got any friends living in the area or southern CA that could recommend someone or watch this lol http://www.bravotv.com/million-dollar-listing

Seriously I was recommended 1 and she was a waste of time, then I read loads of sights and talked to a few, and found the one that was prepared to go the extra mile and was not full of himself got the job, he called me daily or every 48hrs and was on the ball would be at a house as soon as I wanted to view no pi2222ing around!.......ironically I found our house by going to view a short sale and the neighbour came out and said he was going to list in 2 weeks, the rest is history

Pulaski

Foreclosure: the bank has seized the property and ejected the previous owner-mortgagee.

Short sale: the bank is threatening to seize the property but has not yet done so, and the house is in a negative equity situation (aka "underwater"). The owner-mortgagee hopes that the bank will accept less than 100% pay off of the loan in return for avoiding the expense, inconvenience, and uncertainty of seizing the property.

In practice, the banks were rarely willing to agree to short sales, and they could not be preapproved. The seller advertises a potential short sale then the proposal to sell is submitted to the bank, which then decides whether or not to accept a short sale. As noted above, the banks can be very slow in deciding whether or not to accept a short sale.

Havnfun

I am a realtor in Orange County and there are fewer and fewer short sales on the market. A quick search of the areas I work in and there are only 6 short sales and 1 bank owed property out of 176 listings.

A short sale is where the home owner owes more than the property is worth so they sell it with the stipulation that the bank has to agree to accept less than is owed. These properties are usually priced less than a standard sale because the buyer often ends up paying for things in escrow that the seller would normally pay (ie. termite report & repairs, back HOA dues) as well as they can take a long time to close.

A foreclosure is where the bank already owns the property so you are buying it directly from the bank. Downside to a foreclosure is they are often in bad shape as the previous owner was not doing any repairs and sometimes they have been sitting vacant for a while.

Pulaski

"Not doing any repairs"! That may be the least of the problems. The previous owners may also have removed anything that isn't bolted down, such as the fridge and stove, that commonly stay with a house. Removed or destroyed other things just for kicks, such as doors, light fittings, curtain poles, and carpets, or even damage to the drywall (plaster board) walls and it may also have been attacked by vandals once empty, with broken windows or a "stripped" AC unit.

Claire31

What are usually the financial issues with buying a foreclosure I.e are they more difficult to get a mortgage on etc

SultanOfSwing

That's what happened to the house next door to us. It sat vacant for 18 months, bar a period where one of the owner's children had been staying there illegaly.

Anyway, when the new owners were starting to move in, we found out that in addition to a tree that had fallen on the roof during a derecho in 2011; the scrotes had taken all the copper (not just pipes, but from the wiring too), all appliances, basically everything but the bog.

They got it for a song - just under half what we paid for ours, but there was months of work before they were able to actually live there.

Pulaski

Unless you buy "as is", which is difficult as mortgages are generally only offered on habitable homes, there will likely be a "retention", money held back by the lender and reimbursed to you (or directly to the contractor(s)) when a licensed contractor(s) has completed the repairs. So you buy a house that is worth $100,000 when fully repaired, but buy it for $90,000 needing $10,000 of repairs. You put down $20,000, the bank advances $70,000 to make the $90,000 purchase, and on completion of the repairs, you get the other $10,000 reimbursed. The net effect being that you've borrowed $80,000.

sir_eccles

Foreclosures are often/usually sold at auction you are generally bidding against investors and industry types who are there to flip the place and make a profit and you usually need to have cash (bank drafts) to pay for the place.

WEBlue

Our only experience of a possible short sale was sad. A couple of years ago, when short sales were still thick on the ground, we were briefly interested in one a couple of blocks away from the house we were renting. The price was extremely tempting, even though we knew it could take forever to close..... but once we began to hear the circumstances of the family who were desperately trying to find a buyer, we lost our stomach for the deal. Suffice to say more than one member of that poor family had had the most terrible luck. We just couldn't see ourselves living in that house after we knew the owners' story.

Flabound oneday

or pouring cement down the drains !! not seen that one but heard of it....having bought over a dozen foreclosures to remodel and sell I've seen a lot of sad sights

Sally Redux

It was in an episode of 'Flip or Flop'.