What is a bank foreclosure?
A bank foreclosure is what we call a REO property. REO stands for Real Estate Owned what just simple means that the bank owns the property. If someone falls behind on their mortgage payment for more than 3 months the bank will file what is known as a Notice of Default. The borrower (Owner) has 30 days to bring the loan current or the bank will file a Notice of Sale. If the Borrower is unable to make the loan current within the 30 days and the bank files the Notice of Sale the property witll then go to auction. At the auction the bank will have a reserve amount needed and if a bidder does not meet or exceed that amount the loan reverts back to the bank and becomes what we call an REO or bank foreclosure. At one point bank foreclosure homes otherwise known as REO's were the only properties on the market. However since our market has appreciated 5% per year since 2012 we have had few REO properties available and most Borrowers are able to sell their poperties and pay off the mortgage and any late fees incured due to being late on the mortgage. Many of the REO/Bank Foreclosure properties in Las Vegas are owned by Fannie Mae, Freddie Mac and HUD.
How Can I buy a REO/Bank Foreclosure?
Even though the market has appreciated there are still REO properties available. The best way is to contact a qualified real estate agent who understands the REO process. The banks have many forms and systems in place to purchase an REO and sometimes there can be many steps involved. The team members of The Gonzales Team are all educated on the REO process and can help you with finding the right property for your needs. We will be able to search out all the REO properties on and off the MLS. Many banks do not list their REO properties on the MLS and we have experience to find unmarketed propeties going to auction.
How long does it take to buy a REO/Bank Foreclosure?
Once you have an executed offer by both the bank and the buyer you will be able to close within 30 to 45 days. This time frame is the same as a traditional sale.
What is a Short Sale?
A short sale is when a borrower falls behind on their mortgage and submits a request to the bank to perform a Short Sale. However we must remember that the short sale does not refer to time, it refers to the payoff to the bank being short and not the full payoff. Example: Borrower owes $400,000 on the mortgage and the market value that they can sell it for is $200,000. The Borrower asks the bank to take the payoff of the $200,000 as paid in full. The Borrower will be able to walk away from the property with an approval letter typically stating that the short payoff satisfies the payoff in full and the Borrower owes no deficiency.
How long does it take to buy a Short Sale?
We have to remember that the term Short Sale does not refer to time it refers to the payoff to the mortgage company being less than what is owed. Example: If you submit an offer on a short sale and the seller signs and accepts the short sale process then begins. The Seller will submit the accepted offer and all supporting documents to the bank to request the Short Sale. The time frame varies per bank and short sale program that the Seller qualifies for. Typically it takes 3 to 4 months for an approval from the bank and then it is another 30 days for the escrow process to close.
Is there a way that I can purchase a distressed/damaged property and get money for repairs?
YES!! There is a type of financing called FHA 203k that will allow a qualified borrower to obtain an additional loan up to $35,000 towards repairs. This amount can usually be deducted from list price. Just be prepared most banks sell REO and Short Sale properties "AS IS".
If you have any questions or would like to receive a free list of REO/Bank Foreclosures or Short Sales please contact us at 702-291-8126 or at [email protected]
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