So much is going on in the real estate market these days, it seems that it is hard to keep up with the market. If you are working the foreclosure market, or dabbling in the disadvantaged advantage, you surely have run across the bank owned property and the listed 'short sale'. Do you really know the advantages of each? Do you know it well enough to explain it to your buyers or an investor who is calling on a property? Will your presentation convince clients to jump on a deal before the next person? We're here to give you the ins' and outs' of the market, the benefits and pitfalls of each and how to make the best of what is looking to be a stable market for some time to come.

     Bank Owned: Who really owns a bank owned property? At the point where a bank is trying to release debt, the deed holder may be in many varied locations, but the authorized institution has the right to transfer ownership from the lean holder to another party with conditions. What conditions? Primarily money... and that's usually it.
      The last thing a bank wants to do is hold title to property that cannot generate an income. Releasing partial debt is not the business of the bank either. The bank wants paid for any outstanding monies that are owed to release the bank from holding the deed. They don't care about condition of the property or how many upgrades were done - they have a bottom line as to how much cash it will take to recoup any loss.
     So what do you look for? It's never best to jump face first into unfamiliar waters, so do some homework. Time is usually of the upmost importance when dealing with bank owned properties, and banks are reluctant to sway on any conditions stated in the contract for sale. If you or your client can meet the conditions of the offer, look for any conditions that may seem too good.
      Too good? Remember you are buying a home unconditionally, so inspection reports will do little good unless RADON, LEAD or other toxic conditions are present, and that may not even be considered a condition of the sale. You should make sure your buyers are aware that in almost all cases, a bank owned property is bought in its "AS IS" condition, even though some states already sell homes in this manner.

      Short Sales: The premise of the 'short sale' was popular a year ago, and is still being used as a legitimate way to sell a home in a short period of time, with little or no commitment from the seller. In a short sale, the owner of a property offers to accept a lower price than the current market value in order to sell the home faster. This sometimes creates problems for buyers and agents who have not done their due diligence before the contract is signed. Most 'short sale' homes must still be approved by the deed holder, and in some cases, this can be a difficult task.
      Mortgages are bought and sold around the world, so the local mortgage broker who put together the loan, sent it to an underwriter, then to a mortgage banker and then to investors from around the world. The seller may want to sell their home, or need to sell their home, and be willing to take far less than the market value, but that desire may lead to unscrupulous practices or misleading information to procure the sale.
      So what do you look for? Buying a short sale can be a great investment, but it can also encumber the buyer with more debt than the home is valued. Make sure your buyer knows all of the conditions of the sale. Make sure that the asking price releases the property of any debt. Sometimes a second mortgage or a lien on the property may not be included with the sale of the home and remain on the deed. In other instances, monies offered as 'earnest' or 'good faith' money may not be refundable if the contract does not go to closing.
      There are many factors to consider when looking at a short sale and some are positive for the buyer. There have been reports of short sale scams where contracts are signed, monies are paid and the seller didn't even own the house. There are also 'roll-over' or 'pocket' scams where homeowners can offer their home for sale and take a buyers money with little repercussion.
      If your buyer is considering a purchase of a short sale, make sure the home is listed with another real estate company and not just the seller. The seller my think they know everything about their home and how it should be sold, but working with a real estate agency will at least help wart off any potential problems that may arise.

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