Checklist for Buying Foreclosures

Considering the rapid growth in foreclosures and the potential for "bargain deals" many home buyers today are interested in purchasing properties that are facing foreclosure. It is important, however, to not only understand the different stages of buying a home in the foreclosure process but to check and see if as a buyer you are ready and qualified to have the greatest chance of success.

There are three basic stages of foreclosure in California. When a homeowner misses a mortgage payment a Notice of Default is filed and the foreclosure process is triggered, this is called Pre-Foreclosure. If the homeowner does not bring the payments current, the home will go to a Trustee Sale about four months after the default notice is filed. This stage is called the Public Auction. Finally, if the home does not sell at the trustee's auction, the bank takes the property back as REO, or real estate owned.

It is possible to find some great bargains, but to have the greatest chance of success in the purchase of a home in foreclosure ask yourself the following questions:

1. Do I have a home to sell in order to buy a foreclosure?

Most homeowners and banks are not in a position to wait for you to sell your home. In order to get the best "deal", make sure your home is either already sold or you've raised the cash from other sources.

2. Do I need a loan to buy this property?

Because you often have to act quickly it is important to contact a loan agent for a pre-approval letter before you find a home. Not only will you know how much house you can afford, but you will be a stronger buyer especially if there are competing offers for the same house.

3. Do I have a timeframe within which I need to purchase a home or move?

There can be many delays in the purchase process of a home in foreclosure. The old adage "Patience is a virtue" never rings more true than when buying a home that is being foreclosed.

4. Do I have extra resources or lots of "elbow grease" to fix up the property?

Most homes in the foreclosure process are sold "as is". Distressed sellers do not have the funds to make repairs and most banks are not in the business of fixing up properties. Make sure you hire a home inspector to know what you are getting and then be prepared for a little "sweat equity".

Coldwell Banker Announces Buyer Bonus Program

Our "Buyer Bonus Event" kicks off on May 1st to coincide with the end of the tax credit extension and will conclude on July 31st. During this three month period, sellers participating in the promotion are giving 3% of the accepted offer price (up to $10,000 credit at closing) back to home buyers who sign an offer before the July 31st deadline.

We believe there could be a potential slow down in real estate sales once the tax credit extension ends on Apirl 30th. The Coldwell Banker Buyer Bonus Event will allow participating Coldwell Banker home sellers to "essentially" extend the credit for participating home buyers.

Plus the Coldwell Banker Buyer Bonus Event has fewer restrictions. With the increased inventory around the country, Coldwell Banker listings will stand out from the competition.

The goal of this national "Buyer Bonus Event" is to help incentivize buyers that missed the tax credit deadline by allowing them to still reap the financial benefits the tax credit would have provided.

As a real estate leader who has helped Americans buy and sell homes for over a century, Coldwell Banker is committed to helping move the market in the right direction.

Tax Credit Lifts Home Sales

The federal tax credit which ended April 30th sparked a big jump in home sales as first time buyers took advantage of low prices and interest rates. The tax relief was a big factor in the decision to purchase a home for first time home buyers as 69% of those surveyed by the California Association of Realtors said the tax credit was "very important" or "most important" in their buying decision.

Where the federal tax credit ends, the state tax credit begins. On May 1st Californians may be eligible for tax credits of 5% of the purchase price of their home or $10,000 whichever is less. There are no income or purchase limits, but the tax relief will be spread out equally over a three year period. Economists predict that the 100 million dollars allocated by the state of California towards the credit won't last long.

The Anatomy of a Short Sale

Are you having problems paying your mortgage? Like many good folks today you may be upside down on your mortgage. Over the past several months, short sales have helped thousands of American homeowners escape from the tough spot you now occupy. However, not every homeowner is a candidate for a short sale. Here are five steps to determine if you may be a candidate for a short sale.

Step #1: Homeowners seeking a short sale solution must be able to show the lender that they have experienced a hardship. Loss of equity is not considered a hardship. If you have suffered a job loss, business failure, severe illness, divorce relocation, death of a spouse or natural disaster you may be eligible for a short sale.

Step #2 Calculate the current value of your home. A real estate professional can help you do that. Ask your Realtor to also help you tally up the customary expenses of selling. Check your mortgage statements to see what you owe and don't forget to include your monthly interest, which accrues until the sale is final. Compare the current market value of your home to what you owe including the sales costs to get a ballpark figure for the short sale.

Step #3: Determine if you have sufficient time to accomplish a short sale. Pre-foreclosure is the period beginning with the initial mortgage default, this is the best time to start the short sale process. In California, the foreclosure action begins when the trustee files a notice of default. Contact a real estate professional to help you determine if there is enough time to list, market and sell your home.

Step #4: Contact tax and legal professionals. The expertise of these professionals is essential. For example, a qualified foreclosure attorney can help you determine whether the loan is recourse or non-recourse. In a recourse loan, the borrower retains perosonal liabiltiy for any "deficiency" that is, money not paid back after the short sale. The lender reserves the right to pursue the borrower for the additional amount. In a non-recourse loan, the lender is limited to whatever funds are available from its interest in the property itself and cannot force the borrower to repay.

Step #5: Now you are ready to call your lender. Start with customer service and ask if they have a "foreclosure prevention department". Validate that you have no other financial means to pay the mortgage and that a fair market price for your home is lower than what you owe against it. Prepare to submit all the paperwork at the direction of your lender. And remember what one expert said, "It takes more documentation to get out of your mortgage than it took you to get it in the first place".

Frequently Asked Questions About Short Sales

Q: What is a short sale?
A: A short sale is a situation where the homeowner owes more money on the loan than the market value of the home. Because of hardship due to job loss, business failure, illness or other reasons, the homeowner is unable to make their monthly loan payments. To certain qualified sellers, a short sale may be an option to avoid foreclosure whereby the lender agrees to a reduction of the debt owed.

Q: Is a short sale preferable to foreclosure?
A: They can be. Short sales might not hurt a borrower's credit score as much as a foreclosure. There can also be federal incentives that help homeowners facilitate short sales. However, homeowners are strongly advised to have legal and tax professionals review the impact of a short sale.

Q: If the lender agrees to a short sale, is the debt automatically forgiven?
A: Not necessarily. The lender will evaluate each case based on your particular hardship and financial status. That portion of the debt released by the lender is often referred to as a deficiency. The homeowner could still be liable for this amount. It is important to pursue professional legal and tax help to review your short sale agreement.

Q: What are other options besides a short sale?
A: For distressed homeowners a short sale is not the only option. It could be preferable to offer a lender a "deed in-lieu of foreclosure," sell and bring cash to closing, pursue a loan modification or even refinance. Homeowners should contact a real estate professional as well as tax and legal to explore all options.

The American Dream
"For a man's house is his castle; for where shall a man be safe, if not in his house?"

Sir Edward Coke

There is nothing more foundational to the American Dream than owning your home. Over 50 years ago my mother-in-law, Margaret, left Scotland as a young newlywed with her husband, Alasdair to find housing in America. The provision of housing in Scotland was centralized under the government which produced long waiting lists for homes. However, in the late 1950's, in the "land of opportunity" homes were abundant and ownership the providence of sacrifice and hard-work.

It was Thomas Jefferson who believed to own land and make it productive was the right of every American. The greatest expression of personal freedom and self-determination is to own your own property, something no one can take from you. In spite of recent challenges in the real estate market, for many, the American Dream still means owning a home. With low interest rates and lower prices there's never been a better time to own a home. How about you? What does the American Dream mean to you?

There still is no place like home. Let me help you find yours!

CallTamara4Homes.com.