Two New Trends in Real Estate

Foreclosures and short sales are the new trends today in real estate. If you are looking to buy or sell your home, it is important to educate yourself on these trends that continue to become more and more commonplace in the crashing real estate market.

Foreclosures

Foreclosures occur when a homeowner falls behind on his or her mortgage payment, typically for a period of 3 months and the home is then repossessed by the financial institution that gave the loan. This is done so that the lender can recover their loss. It is not uncommon for 6 months to pass between when you miss your first payment and the final foreclosure sale. The amount of time can vary from state to state and can also depend on your lender and how quickly they pursue your case.

Real estate values around the nation have collapsed, and sales of foreclosed homes now dominate the housing market. With foreclosures continuing to soar, nearly 20% of the nation's home sales in 2008 were of bank-repossessed (foreclosed) properties.

If you are someone who is not in danger of foreclosing on your home, then you might be interested in taking advantage of some of the great deals you can get on many homes right now. Perhaps you are a first-time home buyer, or maybe you would like to begin a new "career" investing in foreclosed homes. Because there are so many foreclosed homes on the market, it will be easy to find a realtor who specializes in foreclosed properties. Driving through neighborhoods where you'd like to live is also a great way to find foreclosed homes. Signs reading, "foreclosure", "bank-owned", or "bank repo" are easy to find. Call the agent's number on the sign and inquire about other foreclosure listings that may be coming out on the market. Often, it may be weeks before an agent lists a foreclosed home due to waiting for the lender to approve the list price, so you can get a jump on other buyers by asking about new foreclosures not yet listed.

Short Sales

Because of the collapsing housing prices, a significant number of homes on the market are now worth less than their mortgage balance. Thus, when the home goes on the market for sale, it may have to be sold short, meaning that the sales price is less than what is owed on the mortgage. This scenario obviously can result in a good deal for the buyer, but not the seller. The short sale process is also not an easy one, and the transaction can take a long time to complete because of the flood of requests coming in to banks requesting them. Lenders may also be very strict in their rules regarding short sales, as they must agree to forgive the difference between what they're owed and what the sale brings in.