What to Expect: Buyers Step 1


It’s important to understand that there are several different types of sellers in our current market.  This directly relates to every buyer, as the seller type can drive several steps in the buying process.  First there is a typical resale, which we are most familiar with in a traditional market.  Then there are foreclosure, bank owned, REO-real estate owned property.  Additionally, short sales are part of our market and it’s continued correction. 

Most understand that the foreclosure properties are those that were lost by the previous owner due to the inability to repay the loan/mortgage.  Short sales are different.  The buyer can no longer afford the home.  Hopefully, they have contacted their mortgage company to begin the actionable steps required to sell the property for less than what they owe.  Some banks/lenders will not allow the current owner (seller) to submit any paperwork until they have an offer on the house.  This could mean that the seller has not been approved to sell the home for the shorted amount and that the timeline to close the property could be excessive. 

Sellers in this situation typically work with a real estate agent to list their home, then wait for an offer.  Once the offer is submitted to the seller, they in turn submit it to their bank/lender along with tax returns, w-2’s, bank statements, hard ship letter and any other required documents.  The bank/lender then processes these documents, negotiates or counters with the offerer and works toward closing.  While this is the most time consuming of the three sellers, it can be a great deal for you as a buyer.

Be aware that foreclosure offers can take several weeks to work through as listing agents submit to asset managers.  Specific bank/lender addendums typically follow and will be lengthy.  These can be multiple pages of additional or contradictory information that will become part of the contract.  Usually there is one set of addendums for multiple states; have your agent review these specifics and how they relate to your transaction.  Every scenario is different, however you should be prepared and understand the benefits and obstacles of working with foreclosures.

The traditional resale allows you to deal with the seller directly (allows your agent to deal with the seller’s agent without corporate interference).  They determine the price and terms.  Meaning the amount you are paying either pays off the current mortgage obligation, the property is already paid for or the seller is willing to bring some money to closing in order to sell the home to you.

In any case, now is a great time to buy.  Keep an open mind and plan accordingly.  Deals of every kind are widely available and even if you have property to sell you can benefit.

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