Considering purchasing an REO property? Read this first.

Anyone who’s even thinking about buying a bank-owned property should read this  New York Times article detailing one woman’s quest to invest in a foreclosed home. It outlines in detail some of the many steps that buyers often skip but that should factor into every REO purchase — a transaction that can be an extremely complex, risky process. While it can be at times a bit tough to follow the buyer’s circuitous route to homeownership (this gal did some serious financial finagling!), in the end, all her efforts did pay off. Granted, many buyers looking  at bank-owned properties will follow a different path than this buyer, but the article’s overall message is a valid one: The rewards can be great for those tenacious enough to tackle the job of buying an REO property wholeheartedly and mindfully. P.S. The headline of the article — “What it Takes to Buy a House in Foreclosure” — is an unfortunate one because it will only further confuse a lot of folks. What they’re talking about here are properties that have already been foreclosed upon and have reverted to the banks — they’re referred to as bank-owned or REO properties (for Real Estate Owned). Trying to buy a distressed property that’s in short sale (where the homeowner must sell the property for less than is owed and the bank must approve the sale — i.e., be willing to take the financial loss) is a whole different ball game. About the Author: Lisa Broadwater, GRI, CDPE is a Central Oregon-based real estate professional who specializes in listing and selling homes, especially in Sisters, Tumalo, Redmond and...

Distressed Market Update for Sisters, Oregon – Sept. 2010

Unlike much of Central Oregon (where distressed properties comprise up to 30 percent of the active real estate market), traditional sales continue to dominate the Sisters real estate market. Here’s the latest breakdown, as of Sept. 10, 2010: Of the 226 Active Residential listings, 90.7 percent are traditional sales (205 listings) and 9.3 percent are distressed properties (21 listings). Within the three main Residential categories (Single Family Residences, Multifamily Residences and Residential with Acreage), the breakdown varies only slightly: Of the 123 Active SFR listings, 111 are traditional sales, seven are short sales and five are bank-owned properties. Here, traditional sales account for 90 percent of the existing inventory and distressed properties account for 10 percent of the existing inventory. Of the 10 Active Multifamily listings, all 10 are traditional sales. Of the 93 Active Residential with Acreage listings, 84 are traditional sales, seven are short sales and two are bank-owned properties. Here again,traditional sales account for 90 percent of the existing inventory and distressed properties account for 10 percent of the existing inventory. Here’s a closer look at those statistics in chart form: That compares favorably to the statistics from January of this year, when 82 percent of the 171 Active Residential listings were traditional sales (141 listings), and 18 percent were distressed properties (30 listings). See the chart below for a detailed breakdown of statistics from January 2010. About the Author: Lisa Broadwater, GRI, CDPE s a Central Oregon-based real estate professional who specializes in listing and selling homes, especially in Sisters, Tumalo, Redmond and...

Foreclosure Forum Scheduled in Bend

Today,  the Oregon Housing and Community Services department begins hosting a series of public forums across the state designed to determine how best to provide assistance to Oregon homeowners facing foreclosure. Recently, the Obama administration announced that Oregon will receive $88 million in funds earmarked for the creation of a program designed to help struggling homeowners stay in their homes (Oregon was included in the second round of states that will receive money from the U.S. Treasury Dept.’s   “Hardest Hit Fund”). The fund helps states  with high concentrations of people living in areas where there was an unemployment rate higher than 12 percent in 2009 (in Central Oregon, that includes Deschutes, Crook and Jefferson counties). After stops in Medford and Eugene, the forum will be held  in Bend on Thursday (May 13), from 6-8 p.m., at the Bend Community Center Community Hall (1036 NE Fifth). The final stop will be in Portland on May 19. After Oregon Housing and Community Services receives input from participants at the forums, they will submit a proposal to the U.S. Treasury (the deadline for that is June 1). The program should begin to be implemented in late summer or early fall. Here’s more info about the...

The Case of the Flooded Air Ducts & Other REO Property Inspection Horror Stories

When it comes to bank-owned properties, I’ve seen some pretty unbelievable things in the past year or so. There’s a reason these homes are called distressed properties: Oftentimes, either they’ve been left vacant for long periods of time, which creates all kinds of problems, or the previous owners who surrendered the home to their lender have stripped, damaged or even destroyed the property out of desperation or frustration. To wit: There’s the rural ‘60s home that was in such bad shape I was hesitant to walk through it with my clients, for fear that the dilapidated wood floors might cave in under our weight. The million-dollar log home that had been stripped of just about every fixture in the massive two-story structure (the culprits had been so insistent on taking the kitchen sink that they’d shattered the tile counter surrounding it when they jerked it out). The once-charming Craftsman home on acreage, which had been abandoned by humans but discovered by a very active family of mice (you couldn’t take a step through the kitchen without plopping at least one foot on mouse poop). The creepy secluded workshop with the boarded up windows, which had been home to who knows what (none of us even wanted to know — we couldn’t get out of there fast enough). So nobody has to convince me of the importance of performing a home inspection before purchasing a foreclosure property. But when one of my preferred home inspectors, Dawn Dickens, owner of ACE Real Estate Inspections, offered a class titled “Foreclosure & REO Inspections from the Eyes of an Inspector” in conjunction with...

Brain on Overload: Classes, Classes and More Classes (guess the topic)

In the past couple of weeks, I’ve attended several really good classes, two of which addressed different aspects of the foreclosure market. At the first class, Jim Long, Bend’s Affordable Housing Manager, discussed a new loan program available in Central Oregon for residents with moderate income who purchase bank-owned homes. As part of phase two of HUD’s Neighborhood Stabilization Program (also know as NSP-2), qualified buyers may receive a zero-interest, deferred-payment loan of up to 20 percent of the purchase price (or a maximum of $35,000). Those funds can be used to help with a down payment, mortgage buy-down or closing costs, or may go toward completion of an unfinished home. Only owner-occupied purchases are eligible. Bend has been allocated $2.1 million in funding (not all of which will be available to residents.) Long said the funds are expected to be available by the end of April, and will be distributed throughout Deschutes, Crook and Jefferson counties on a first-come/first-served basis. Another important caveat, he added: if you’re considering seeking these funds, you must fill out the application before an offer is written. One other thing to keep in mind: It’s a federal program, with the requisite red tape involved, so patience and persistence are recommended. So, for example, the closing might take longer and there are a few additional hoops to jump through (a HUD-designated home inspector, for example). But what a great coup for Central Oregon! (By the way, Oregon’s application to receive the NSP-2 grant money was one of only 56 of the 480 applications that were approved — and the only award in the Northwest United States.)...

The First-time Home Buyer-Distressed Property Paradox

Lately, I’ve been thinking a lot about first-time homebuyers. (What with all the industry and media attention focused on the impending deadline of the First time Homebuyer Tax Credit, it’s hard not to.) First-time buyers are the ones who, even in a traditional market, often need the most help negotiating the purchase of their home. For them, even under the best of circumstances, the process can be overwhelming. Because they have little or no first-hand knowledge of the many ins and outs of the home-buying process, enlisting the services of a knowledgeable real estate agent can be a real benefit. Of course, today’s market is anything but traditional. In Central Oregon, like much of the country, distressed-property inventory accounts for a good chunk of the entry-level market. In Bend, for example, of the 209 Residential Single-family-residence listings under $200,000 active as of Jan. 20, 97 listings (46 percent)were short sales and 40 (19 percent) were bank-owned properties. In total, 65 percent of available homes under $200,000 are distressed. Sixty-five percent! That means there’s a good chance the first-time buyer in Central Oregon will consider buying a short sale or bank-owned property. In fact, that’s the segment of the market perhaps most likely to purchase a distressed property. It’s also the segment least likely to understand the potential pitfalls of the distressed-property purchase. Unfortunately, as many buyers have learned the hard way, this can be a disastrous combination: Because not only do many first-time home buyers not know the right questions to ask, but they may not even realize that there are questions to ask. However, in a distressed-property sale,...
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