LOOKING AT lender-owNEDS  / foreclosures

Most short-sale properties end up going into foreclosure.

Title is cleared at the completion of the foreclosure process when the foreclosing Lender becomes the property owner.

Depending on the property condition, the Lender may put it on the market in its acquired condition or may make some repairs first.  Lender-owneds are sold “as is” with no condition disclosures.   

As a Buyer, what you see is what you get, and what you DON’T see is also what you get.  A thorough professional home inspection is a must for this kind of purchase.  Just be aware that home inspections are limited – they don’t go inside the walls (are there bare wires that have been shoved inside & wall-boarded / painted over?) or down into the pipes (did someone pour granite down those pipes?).  And if there is a pool – there is no disclosure on how long that pool may have been empty, with its structure baking in the Arizona sun, before that property was brought to market. 

When writing an offer on a Lender-owned property, it is wise to take photos of any existing items that might “disappear” during the transaction timeframe, like appliances and the AC units!

How does the purchase process work:

A prospective Buyer for a Lender-owned property submits an offer.  Usually there is a deadline for offers to be received and numerous offers are submitted, but the Buyers are not told how many or at what prices.  Offer(s) are then evaluated by an asset manager, and sometimes competing Buyers are given a chance to “re-submit” their “highest and best”.  The asset manager makes a selection based on price and Buyer financing package – again, Buyers with all cash who can close in a short timeframe are in a favored position.

The majority of properties on the market in many areas are Lender-owneds or short-sales.  Price-wise, they may be listed a little lower than a regular Seller property, but their purchase issues are the reason for that discount.  Often their low price becomes a higher price, including above that of a regular Seller property, due to the multiple offers being submitted. 

As of January 2012, there is a lack of inventory for sale.  About 40 percent of the Valley’s closed sales are Lender-owned sales and about 20% are "normal" sales.   Average days on market for all sales has dropped, and most correctly priced non-distressed sales are taking place within hours of being brought to market, often with multiple offers.  

01-2012