Home Buyers looking for a good deal often want more information about buying a foreclosure. Buying a home that is undergoing the foreclosure process or has gone into foreclosure can be a bargain – but it may also become a nightmare. If you are considering one of these homes you will need to proceed carefully.
Homes in various stages of foreclosure are often listed in the MLS (Multiple Listing Service). The MLS search I have on this website scans listings and allows you to search homes possibly in pre-foreclosure or homes that are bank-owned (REO).
Let me explain:
There are basically two types of foreclosure related listings in the MLS:
Short Sales
A “Short Sale” is a situation where a homeowner is attempting to sell a home for less than is owed on the mortgage. The owner has usually stopped making payments and the home is likely in the process of foreclosure.
In Maryland, these types of listings must be disclosed to potential buyers so you will find comments like “short sale” or “third party approval required” in the listing.
Buying a short-sale requires a LOT of patience. You probably shouldn’t consider a short-sale if you have to be in the home quickly. It is not unusual to wait weeks for any answers and months to get through the entire process.
That being said…if you are patient and flexible, then buying a short sale property may be a possibility for you.
The other type of foreclosure-related properties listed in the MLS are:
Bank-Owned or Real Estate Owned (REO)
These properties have already been foreclosed on and are now owned by the mortgage lender. These homes have usually gone to auction and either did not receive any bids or the bids were too low.
Buying one of these homes also requires patience, however, the process is usually a lot smoother and faster than buying a short sale. Can things still go wrong? Absolutely! However, banks seem to be streamlining their process and I can say that the last two REO sales I did went surprisingly well.
As always, educate yourself before buying anything and make sure you have a good Buyer’s Agent on your side. (That would be ME!) Please give me a call if you are interested in buying a home or if you just have questions.
Now….
