The question I have been asked the most in my 14 years as a Realtor in Delaware is
"Larry, How about foreclosures?"
Most of the time its in email for or over the phone so in order to have this info available to everyone here are the different types of homes that are for sale in a nutshell.
1. Realtor listed home- The most common type of sale is the home listed with a Realtor.
Usually the seller has some equity in the home and gets a check at settlement to purchase another home so his mortgage lender gets paid and full. This is usually the easiest home for a buyer to purchase because the transaction is only between two parties (buyer and seller).
2. Short Sales- A short sale is a home listed for sale where the Seller owes more on the home than they can sell it for after paying taxes, closing fees and other fees associated with selling a home.
Local rules require the Seller to disclose to potential buyers that a 3rd party approval is needed to complete the sale. Here is where it gets sticky.
Example : Lets say the home is listed for $150,000 and you make a full price offer to purchase of $150,000. Your agent submits the offer to the seller and then the sellers mortgage company. In a ideal situation the mortgage company will get the offer, look it over and decide if the want to proceed. But since they don't know what the home is worth they send someone out to look at the home and give them the value so they can make a informed decision. Makes sense right? Sure
Ok that part may take up to 3 months or longer but during that period the seller may be sending other offers to his mortgage company to consider. (the seller doesnt have to tell you this) The bank looks over those offers and just like any seller chooses what they think to be the best offer that is most likely to go to settlement.
If you don't have the best offer and one is acceptable to the mortgage company you don't get the house, you may not even get a chance to increase your offer.
At some point the mortgage company may also come back and say "Thank you for your offer but our appraiser said the home was worth $180,000 and we will not take a penny less."
That's right, JUST BECAUSE THE SELLER LISTED THE HOME FOR $150,000 MEANS NOTHING TO THE MORTGAGE COMPANY!!!!!!! They are not required to sell it that low or any price if they don't want to.
Short sales are the most stressful way to purchase a home for a buyer and are to be avoided if you want to move within a year or two. If you have a house to sell don't even bother with them, you wont get the home.
3. Bank owned homes
What makes a bank owned home? The most common ways are when they get the home back is if the owner surrenders it to them or the bank forecloses on the home.
How does it affect you as a buyer? The process usually goes pretty smooth. You submit the offer, the bank may take 2-3 business days to review it so you will know rather quickly if you get it or not. You may be required to turn the power and or water on to the property if you are going to have a home inspection but don't be shocked if the bank doesn't want to repair anything.
4. Sheriff Sales
This is not the way to go if you don't know what you are doing. You show up at the sale along with a couple hundred people and the homes are auctioned off to the highest bidder. You will not be allowed to enter the homes you are bidding on unless you get permission from the owner and the last thing a owner wants to do is show you the home he is losing. I wouldn't knock on THAT door!
If you are the highest bidder you must put 10% down and the balance within 30 days or you lose the 10%!
If your mortgage company doesn't think the home is a good risk you lose the 10%
If you find out the home has a $50,000 lien against it you still have to buy it or you lose the 10%.
If you really want to try this show up at the sale early, leave your check book at home and find out as much as you can, make some friends, talk with a attorney, do your homework!!
If you have any questions about buying or selling real estate feel free to give me a call anytime
302-530-9186. To search for home in the New Castle County area of Delaware click below.
Larry Hultberg Delaware Realtor
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