Puget Sound Foreclosures
The Puget Sound Real Estate market has not been immune to the national foreclosure trend. This situation presents a unique buying opportunity for those interested in purchasing a home for the very lowest price possible.
In order to be successful purchasing a foreclosure or distressed property in Puget Sound it's important that you are familiar not only with the foreclosure process, but also the common terms used to refer to each buying opportunity. Each opportunity presents it's own set of challenges, many of which will be completely out of your control. Blanket statements about whether foreclosures are good or bad investments cannot be made in this area of Real Estate. Only by evaluating each specific property and your own situation can you make an intelligent decision whether to buy a foreclosure.
REO stands for "Real Estate Owned." It's a term used widely in the real estate and banking industry and refers to bank owned homes and real estate. These are often the very best buying opportunities available in the Puget Sound real estate market. These homes have already been through the foreclosure or deed in lieu process and are now owned by banks or corporations. These companies are in the business of owning and selling mortgages, not real estate. Many banks price their reo properties aggressively to ensure a quick sale.
There are some significant downsides to purchasing a bank owned home or real estate. Banks often do not comply with disclosure requirements. As they have never lived in the home, they have no knowledge of defects with the home. Most banks will have an extremely one sided "bank addendum" that they will add to the purchase and sale agreement. I've seen many that include late fees in excess of $100.00 a day for late closing. In addition many banks reserve the right to accept a higher offer even after they have signed your offer. Banks will not entertain your offer unless it is accompanied by a pre-approval letter from a lender. Pre-approval is absolutely mandatory when pursuing a bank owned or reo home.
For these reasons, and many more, we recommend all our clients speak with a lender and apply for pre-approval status. It's a very quick process and will benefit you greatly in the negotiation of your new home whether it's an REO, Bank Owned, Short Sale or conventional resale.
A short sale is simply a property that is offered for sale at less than what is owed to a bank, lender or investor. Most often these sellers are 1 or more months late on their mortgage and are attempting to sell their home before it is foreclosed upon. Some of the best priced homes you'll find on our site are short sales. Short sales present an interesting opportunity to purchase a home for less than what is owed by the seller, but they do come with some significant pitfalls.
Many of the homes you'll find that are listed at "too good to be true" prices are indeed short sales and yes they are in fact, too good to be true, in many cases. Short sale homes are often priced at rock bottom prices in an attempt to lure unrepresented buyers into submitting an offer. Buyers that choose to pursue purchasing a home without the guidance of their own buyer agent run the risk of becoming pawns in the short sale game. Remember the listing agent represents the seller, they are duty bound to work in the seller's best interest. Most often it is in the seller's best interest to receive an offer...any offer. Once the listing agent has an offer in hand they can begin negotiating with the bank to determine the real price they will let it go for. This may or may not be in the same ballpark as the original asking price.
This process can take from one day to several weeks to hear back from the bank if ever. There are no guarantees when buying a short sale.
Both Short Sales and Bank Owned/REO homes can provide excellent buying opportunities for the right buyer. Knowing the risks and rewards of each will greatly increase your chances of successfully buying a Puget Sound Foreclosure.