Picayune MS Real Estate – Pearl River County Homes

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by Michelle Fradella, Broker – Pinnacle Real Estate Services

With the market changing drastically over the past few years, there is a new question that must be asked – “Can you, Mr/Mrs Seller, afford to sell your home?”  Now this question may be a bit alarming to some people, but the fact of the matter is sellers are finding that the market is not able to sustain the amount of money they owe on their homes (if they have refinanced in the past 5 years), and they may not be able to get enough for their home to actually close without bringing money to the table.

Many sellers may have heard about, and think they are in the position to consider a “short sale”, but unfortunately not everyone realizes the intricacies of doing one.  It’s important for a seller to notify their Realtor AT THE TIME OF LISTING, that they will come short of the amount they need to pay off their loan, and will need to ask the lender for the possibility of a short sale.  Keep in mind, however, that the lender is never, in any way, obligated to actually take less than what is owed on the house, and that there are specific circumstances that must be present, in order for this to be considered.

A short sale is not something that can be handled overnight, either.  The process will all depend on many variables that are not the same in each case.   A short sale can take as short as a few weeks, or a few months, to over a year to get approved.  A buyer may not be willing to wait for you to get that approval, or their lender may not let them wait, either.

Another important factor to know is that (even if you are in the process of working a short sale with your lender, and have a buyer ready to buy) if you don’t make your regular payments to your lender, they can, AND WILL, foreclose on your home.  If you aren’t able to make the payments during this time, your Realtor needs to know this, so they can also be in touch with the Foreclosure Department for your lender, and communicate with them constantly to assure that the house isn’t taken in foreclosure.  It’s standard practice that the foreclosure department and short sale department of a lender do not communicate with each other, and things can go wrong very quickly.

When putting your house on the market, you have to disclose to all Realtors and parties that your home can only go to closing if the lender approves a short sale.  You will also need to get all the contact information for your lender to your Realtor so they can be in constant contact with the lender to assure that things are moving in the right direction.  Be aware that not all Realtors are experienced in the intricacies of short sales.  It’s very important for your Realtor to know and understand the process, to be able to assist you in the best way possible.  Look for a Realtor that has the “SFR” designation (Short Sale and Foreclosure Resource).

Remember to always disclose to your Realtor, up-front, what your true situation is, and be prepared to be in the process for the long haul.

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The real estate industry is reshaping a new market as a result of the real estate bubble burst and the sub-prime mortgage problem.  We are now witness to the emergence of a new phenomenon called a foreclosures home.

Investors and homeowners who can pass the stringent requirements of financial institutions may consider investing on a foreclosures home.  There are a lot of properties that are on the FHA foreclosure listings we can consider as “best buys.”  Another thing to watch out for is the impending occurrence of a second wave of foreclosures; this time in the prime property sector.

Best Practices When Buying Foreclosures Home

Buyers can follow either of three routes in buying foreclosures home.  One option would be to transact directly from the homeowners before the real property is foreclosed by the mortgage lender.  This approach is referred to as pre-foreclosures.

Another approach is through auction. Prospective home buyers are required to bid the highest to purchase a foreclosures home.

The third one involves direct transaction with the real estate company.

Buying Through Pre-Foreclosure

Pre-foreclosures can be an attractive approach under the following circumstances.  Prospective home buyers must have the available equity to close out the deal with the present owner of the real estate property.  You should also have access to complete information appertaining to the property; particularly the title, the mortgage structure and liens.

The owner of the home gives up his rights to the property by signing a deed in your favor.  You are in effect assuming the mortgage along with the rights to the real estate property.  You also have to pay all back payments or mortgage payments that are over due.

The auction approach may vary depending on the state where auctions of a foreclosures home are held.  It is essential to note at this point that this approach carries the heaviest risk.  This method, however, may also yield the greatest benefits to the winning bidder, as he stands to gain as much as 40% out of the transaction.

The downside of this approach is that buyers will not be able to do a thorough inspection of the property prior to the auction.  Winning bidders also have to pay in cash.  In some instances, you may also encounter problems with former owners of the property refusing to vacate the house.  In addition, you may also compete with real estate investors who are out to cash in on the purchase through resale as well.

Buying directly from the real estate company entails lesser risks when it comes to the actual condition of what you are buying.  You are afforded ample time to inspect the property.  You can also demand for a clean title and also add a stipulation in the contract that it is subject to getting a mortgage.  Brokers usually handle the sale of foreclosures home in behalf of the banks.  This approach is the safest amongst the three approaches, however, the downside would refer to lesser gains from the purchase of the foreclosures home.

Selecting the right method in buying foreclosures home would depend on the goals and circumstances of the buyer.