Talk about foreclosures is everywhere.  It is very likely, if you are shopping to purchase a home, that one or more of the properties are going to be in some state of foreclosure and most likely they will be REO properties.  REO properties are ones that you will find on the traditional MLS but are actually being sold by lenders and marketed by real estate agents.  So when it comes to buying foreclosures, a lot of buyers are wondering if the rules are somehow different and if they are what do buyers need to know about foreclosures. 

It is important first to understand the foreclosure process.  As soon as a homeowner is late on a single payment, the foreclosure process actually begins.  The lender will file notice with the county that they plan to foreclose on a property.  At that moment, the clock is ticking for the homeowner to make their payment.  The timeline differs by location and state legislation, but at some point, if the homeowner is not able to make the payment or sell the property, there will be a public auction held for the sale of the property.  This is the foreclosure sale.  If the property does not sell at auction, ownership of the property falls into the hands of the lender making it a bank-owned property, also known as a REO or post-foreclosure.  

The structure of foreclosures allows buyers three separate buying opportunities.  I you can identify a pre-foreclosure by tracking notices filed with the county, you have an opportunity to approach the homeowner and offer to buy out the homeowner for what they owe on the property or some time even less than what they owe.  This is considered a private sale.  Additionally, you can work with both the lender and the homeowner to come to terms for a short sale, where the bank tells the buyer just how low they will go on the sale of the property.  Both of these options save the distressed homeowner from having to deal with the credit damage associated with being foreclosed on.

The second buying opportunity is to purchase at auction.  Foreclosure auction purchases require you to have cash on hand for the property.  Most auctions see some good level of bid competition so be sure that you know your financial limits to the purchase.  One downside to buying at foreclosure auction is that you are unable to complete a home inspection before the purchase and you may end up with a property in need of tremendous repairs.  However, most properties sold at auction are sold for well below market value and there are many loan programs designed for repairing such properties.

The final and safest way to purchase foreclosures is in the post foreclosure or REO state.  In the majority of cases, when ownership of a property that did not sell at auction returns to the lender,  the lender will clear back liens, have the property emptied and in many cases they will address major repair issues that may exist.  It is for these reasons that often REO properties are priced higher than short sales and foreclosures, but the risks involved are much lower and the price is generally still below market value.

With the real estate market struggling to move foreclosures, many people are taking advantage of this time to buy by seeking out great deals on foreclosure and REO properties.  Most foreclosures can be purchased at auction for well below market value.  REO properties, or post foreclosures, offer an even stronger investment opportunity.  An even newer consideration in the foreclosure markets is timeshares and honestly, if you had always wanted a timeshare, there is no better time to buy.  With one exception; timeshares appear to be the staple of scammers and frauds.  One must be weary when purchasing timeshare foreclosures to avoid getting caught in a scam.

When you are seeking out timeshare foreclosures, it is important to conduct good research on the property so as to avoid being taken advantage of.  There are some really great questions you need to ask and information that you need to gather before you look any deeper into this kind of foreclosure purchase.

•    Find out why the seller is selling their timeshare
•    Is there a reason that the sellers were not able to move the property on the MLS
•    When are their weeks for the timeshare and does this coordinate with your vacation plans
•    Is it a nice vacation spot year round or is it only seasonal
•    What are the conditions surrounding the property

It is always important to find out about home owner association fees and other maintenance charges that may come with the timeshare foreclosure.  Don’t just get estimates on this year’s fees, make sure you research fees from previous years so you can figure out their rate of growth and how much they will likely change in years to come. 

It can also be beneficial to read reviews of the area in which you are looking at a timeshare foreclosure.  It is likely that this is not the only timeshare in area and looking at reviews of other timeshares in the same neighborhood can reveal a lot about the neighborhood, businesses and what you can expect of your neighbors.

One of the reasons timeshares fall into foreclosure is because the owners were unable to sell them on the conventional market.  There has to be a reason behind this, besides the poor economy.  You want to ask the right questions and get a clear picture as to why this property fell into foreclosure in the first place. 

You should always treat buying a timeshare as if you were purchasing a second home.  When contemplating your timeshare for re-sale remember that they don’t unload easily, so you should be prepared to hold onto your shared vacation spot for years to come.  Basically, unlike second homes and vacation properties, timeshares are considered investment properties.  You will not likely profit from selling your share of the vacation property, but for a long term access to your favorite vacation spot, timeshare foreclosures are a great way to save on your vacation each and every year.

There are deal seekers in every market and the real estate market is no different.  If you have been considering the US Department of Housing and Urban Development’s 100 dollar down program as a great way to save when buying a HUD home, then you need to be sure that you understand the program completely before you seal the deal.

HUD has a bounty of programs that help prospective home buyers navigate and succeed in buying the home of their dreams; or something close to the home of their dreams.  Most of their programs are focused on the financial side of home buying as this is the biggest condition that holds people back from buying a home; money.  The $100 Down Program from HUD is one such program that is designed to attract buyers to the market to move the overstock inventory. 

More specifically the HUD $100 Down Program is an initiative to attract buyers to purchase homes using FHA financing and homes that are in post-foreclosure.  This means the homes have been repossessed, failed at auction and are now owned by the FHA or Federal Housing Administration.  In order to participate in the HUD $100 Down Program you must use FHA financing, the property must be used as the buyer’s residence and the purchase price of the home must be equal to or less than the appraised value of the property.

The obvious attraction to the HUD $100 Down program is, well, the $100 dollars down.  Most traditional real estate purchases require a deposit of around 10 to 20% of the home’s value.  Adding to the appeal is the fact that there are no more 100% financing offers being made since the market collapse in late 2007.  Additionally, with HUD homes the buyer sees additional savings as market prices are usually lower as well.

There are two sides to every coin and the considerations you need to make regarding the HUD $100 Down Program is no different.  You need to fully consider the fact that you are purchasing a foreclosed home with all of its issues.  Most foreclosures, even from HUD, are being sold “as-is”.  You also are required to use FHA financing for the loan which means you are locked into this one loan rate and offer and giving up your ability to shop around for new or better rates. 

Ultimately, the HUD $100 Down Program is a great way to purchase a home at a reasonable price with a small earnest deposit.  This often leaves the financial door open for the buyer to make repairs while living in or at the property.  If you are looking for a way to purchase a home without spending your entire nest egg on the deposit, then you should see if you qualify for the HUD $100 Down Program.  Let us help, contact Trent Realty to find the Florida HUD home of your dreams and learn how to see if you qualify for the HUD $100 Down Program.

Fannie Mae declared April 11th that borrowers buying a Fannie Mae-owned property through HomePath will get up to 3.5 percent in closing aid.  The first offer must be presented on or after April 11, 2011, and the sales agreement must close on or before June 30, 2011 in order to be qualified for the incentive. Fannie Mae stated it can give no pledge on the time needed to close, but initial offers put forward after May 15, 2011 are especially questionable for closing by the June 30 deadline. 

To qualify, purchasers must inhabit the home as their primary residence; sales to investors are kept out.  It is the goal of Fannie Mae's policy to attract qualified buyers to the market and there by reducing the inventory of vacant homes.  This is essential to stabilizing neighborhoods and bringing about market stabilization.  When combined with today's low interest rates, this new incentive will be very helpful especially for families looking to buy a home. 
Retail and public entities are likewise eligible for the special buyer-assistance offer, however pool and auction sales are not qualified.  Fannie Mae had rolled out a 3.5 percent subsidy for REO buyers in January of last year which showed considerable success and has therefore extended or restarted the temporary buyer aid incentive numerous times.  This is a strategy targeted at helping reduce a bloated supply of repossessed houses.

Fannie Mae acquired 262,078 single-family REO properties through foreclosure in 2010.  As of December 31, 2010, their inventory of single-family REO properties was 162,489. All Fannie Mae-owned REOs are listed on HomePath.com and most listings include detailed property descriptions, photographs, and community and school information. Many Fannie Mae-owned properties are also eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers homebuyers an opportunity to purchase with as little as 3 percent down.  When you need to buy an REO property, it is always best to work with an experienced REO agent.  They can help guide you through the purchase process and help you make sure your REO offer is in perfect order for quick approval.  Contact Trent Realty to get helping finding the perfect REO property and take advantage of this excellent opportunity.