Are you looking for a home in the Granada Hills area to reside in or purchase as an investment property? Do you want to find a way to save money, invest in established or up-and-coming neighborhoods, or get the most for your dollar? Your answer may lie in purchasing a home through a short sale, or a foreclosure. Here are some points to consider.
Short Sales
In a short sale, a seller is upside down on their mortgage. They owe more than they have in equity and are asking their lender to accept a lower price for the home. Before you do anything: hire a real estate expert who has dealt with short sale negotiations before.
Advantages to Purchasing a Home on Short Sale
- Since the sellers are more likely to be occupying the home, it is often in better condition than a foreclosed house.
- The pricing may be under the market value as the sellers are trying to pay off their loan to the bank and save their credit rating.
- There is less market competition as the sellers must get the sales price approved by their lender.
Your realtor will:
- Confirm that the buyer has been approved for a short sale by the lender.
- Perhaps be able to speed up the acceptance process by the bank.
- Ensure there isn’t a deficiency judgment that would hold you liable for paying the difference between the sales price and the actual amount borrowed.
Foreclosures
In a foreclosure, the mortgage has not been paid for months; the owner has defaulted on their loan. If the bank and the home owner cannot come to an agreement, either a payment schedule or a short sale, the property defaults to the mortgage lender and goes into foreclosure. An auction is then arranged. Your realtor may not be able to help much with the auction itself, but if you can find a home in pre-foreclosure (short sale) your realtor will have more room to negotiate. Foreclosures in California can go on for several months. That’s a long time if you need a home now. However, if you can wait, you may be able to get a great bargain. As with a short sale, hire a qualified local real estate professional to handle all the legal ins and outs.
Advantages of Buying a Foreclosed Home
- Often banks have put money into a foreclosed home to make it more salable.
- You may be able to purchase a home at auction for well below market value.
- The bank will be more motivated to negotiate if the home is purchased pre-auction or if it sits on the market too long afterwards.
Your realtor will advise you of any obstacles such as:
- Judgments, liens, or back taxes on the property.
- Legal liabilities that do not require the mortgage lender to provide the history or condition of a home that has gone through foreclosure. In many cases, they may even not allow inspections prior to the sale.
How to Make a Successful Home Purchase
As discussed in previous blogs, decide your wants and deal-breakers before you start looking, and know your time constraints for your move. An experienced local real estate expert can help you vet the homes and take the lead in the negotiations with the homeowner or lender.
Raquel
Magro Realtor has successfully handled many short sales and
foreclosures for her clients. Click the link to get started on your
next purchase.
Sources:
How to Buy a Foreclosed Home in California - Mashvisor
How to Buy a Short Sale in California (sfgate.com)
What Is the Difference Between a Short Sale and Foreclosure? (realtor.com)
What Does Notice of Default Mean? | California | Osborne Homes
House is Being Foreclosed in California | Help | Osborne Homes
7 Disadvantages of Buying a Short Sale (thebalancesmb.com)
The Pros and Cons of Buying a Short Sale Home (redfin.com)
Advantages & Disadvantages Of Buying A Foreclosure - BallenVegas.com
7 Key Benefits of Buying a Foreclosed Home (interiordesignshub.com)
