Tuesday, February 26, 2008

Foreclosures, Short Sales and Desperate Sellers

As an active Real Estate Investor and Buyer's Agent I have the opportunity to view a whole lot of homes (via MLS) on a daily basis. What is very interesting is that there are many homes that have been on the market for a very long time and they are dropping in price in gigantic increments. It is no longer unusual to see $50,000 to $100,000 price drops. Many of these properties are either in foreclosure or going into foreclosure. The banks holding these non-performing loans in their portfolios are getting pretty antsy about being long term property managers. At first they were not very amenable to deal with when trying to put together a short sale but slowly they have been coming around. I still find it easier to deal directly with very motivated sellers who are not in foreclosure but really do need to sell. Many good deals can be found this way if you know what to look for. I often employ my own buyer's agent when I am interested in a property since this saves me time and money. They will go out and preview up to 6 houses per day for me and submit offers on whatever ones sound good. They get paid a commission from the sale and they are extremely helpful when it comes to negotiating in my best interest. It is also very helpful to be removed from the negotiation if you are the buyer. This practice puts a third party negotiator in the middle of the deal so nothing becomes too personal when going back and forth on terms and price.

I know a lot of buyers are still sitting on the sidelines waiting for home prices to drop even further. I, too, agree that this will happen however there are always good and even great deals out there. Waiting is not always the best strategy unless you are sure that you are the best market timer in history. Even for us professionals, it is difficult to gauge the top of the market when one should sell and the bottom of the market when one should definitely buy.

Enjoy what's left of Winter and get your garden trowels ready for Spring.

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