- Real Estate
- Area Info
- Contact Us
Before we take a tour of foreclosed properties it is important to learn about ALL distressed properties, including short sales and REOs. There are many misconceptions out there, so taking the time to understand each one will definitely pay off. First of all it is necessary to understand that not all foreclosures are great buys. Many times the best buys are the ones where sellers still have equity in the property and are willing to negotiate based on property condition, incentives and price.
Simply put, a short sale is a sale of a property for an amount that is less than the amount of the loans that must be paid to satisfy all the mortgages on the property. The advantage to the seller is that the seller avoids foreclosure and the possibility of a deficiency judgment. The advantage to the lender is that, although the lender is accepting a loss on the sale of the property, the lender avoids the lengthy and costly process of foreclosure, the substantial delay in securing the ability to resell the property, and the likelihood of substantial deterioration in the condition of the property. Key points of a short sale are:
The principal benefit to the buyer of a short sale is that the seller may still be living in and/or taking care of, the property. The seller still has a vested interest in the property, as the seller is working with the bank to get it sold in hopes of avoiding foreclosure. The limitations for a buyer of a short sale is that the process of securing lender approval may take a significant amount of time, and the lender may impose conditions on its acceptance that are unacceptable to either the buyer or the seller. Also, the buyer must determine if there are any other liens against the property, and if all property taxes have been paid, as the buyer will be responsible for any that exist and are not required to be paid from the sale proceeds at closing.
A foreclosure is when the owner's right to a property is terminated, typically because of default. Often this involves a forced sale of the property at public auction, with the profits being applied to the mortgage debt. The foreclosure laws for Beaufort County are:
For more information on South Carolina foreclosure laws click on the following link http://www.scstatehouse.gov/code/t29c003.htm or contact an experienced attorney.
The benefits for the buyer are that the foreclosure has eliminated all financial obligations which are subordinate to the lender's mortgage, such as a second mortgage, fees and assessments by any applicable regime or property owner association, or other judgments against the seller, which greatly simplifies the negotiation of the purchase price, and, since the lender has a greater motivation to sell at this point (because it now owns the property), financing by the lender may be easier to secure. The limitations of a foreclosure are that the condition of the property may have deteriorated, especially if it has been vacant for awhile. Usually the lender is unwilling to accept any responsibility for the condition of the property or to make any repairs, and will require that you release it from any liability with respect to the condition of the property. Also, the lender will be unwilling to give a general warranty deed, making an owner's title insurance policy extremely important for the buyer.
If a purchase is made by the lender at auction, the property becomes known as an REO or Real Estate Owned Property. The lender may have lost quite a bit of money due to the foreclosure so during the REO process they are usually looking to garner fair market value for the property. It is at this stage that the lender secures the services of a local real estate agent to assist in the upkeep as well as the marketing and sale of the property. If the loan is backed by a government agency they would be responsible for selling the property.
At this point the bank owns the property and is now carrying all of the costs. As the bank’s costs go up so does the potential for them to want to unload the property. It all depends on how much they have invested in the property and how long they wish to hold it. If the property is in poor condition there is a chance to get it significantly under market value. There may be multiple offers coming in to the bank so make sure and turn in your best offer. Even if you turn in a strong offer you may not here back from the bank for weeks or months as there are multiple decision makers and they are inundated with other foreclosed properties. As with a foreclosure an REO sale will not attest to the condition of the property and will make you sign addendums waving them of liability.
In today's market, distressed properties are worth a serious look, just keep in mind that the best buys may not be a distressed property at all. Let's begin with determining what you are looking for and then we can tour ALL of the properties that match up. One thing is for sure ... with inventory being high, prices low and mortgage rates at historic lows ... there is no better time to buy!