We are currently in a buyer's market and there is potential for a buyer to find a great deal throughout the county. The current housing inventory within the Ventura County Multiple Listing Service consist of (1) Resale (2) New Homes (3) Foreclosed (Bank Owned) and (4) Short Sales. All these particular properties need to be handled differently.
I meet with many buyers that would like to purchase bank-owned or a short sale property claiming they are the best deals. While this may be true, depending on the buyer's needs it may not necessarily be their best choice. Often times these types of properties are distressed and require a large amount of work. For example; if you purchase a home from an individual seller and there is termite work to be completed, the seller will normally be required to do so before the close of escrow. However, I have seen short sale and bank owned properties that required a substantial amount of termite work (thousand of dollars) and the bank refused to cover the costs. This has left the buyer with the decision to cover the cost or walk away from the purchase. This is why it is so important to meet with a trusted real estate professional to evaluate the buyers' current wants and needs and determine the appropriate property. Communication with your agent is the key!
To help you better understand the differences of bank owned properties and short sales, below I've described some of the issues that a buyer may face;
BANK OWNED: Is when the bank has foreclosed and elected a Real Estate professional to sell the home on their behalf. As mentioned above, you can get a great deal from a bank owned property but you have to be prepared for potentially purchasing a distressed property. Normally these homes need a lot of work and the current homeowner will have left a home that may be in disarray. They might not have maintained the home for various reasons; including but not limited to a lack of finances to make needed repairs or anger and frustration that they had to surrender the home to the bank. The truth is Bank Owned properties are exempt from providing disclosures. Meaning you don't get to learn the history of improvements, repairs or flaws that a seller is normally required by law to provide to a buyer. This is why it is extremely important to hire the appropriate professionals to conduct the proper inspections and make sure there are no surprises of condition and defects.
Another issue, we as Agents face, with Bank Owned properties is the bank may select services from out of the area. These services include Escrow & Title and these out of area services may not be aware of the customs and requirements within Ventura County. Every Agent really needs to be sure to scrutinize and analysis the paperwork to protect their clients.
SHORT SALES: A homeowner (seller) is trying to negotiate with the bank to take a lesser amount than the loan amount. Short Sales are extremely time consuming and takes a lot of persistence by all parties. Not only does the seller need to approve the offer but so does the bank, and sometimes you are dealing with multiple banks and multiple loans. The process of the short sale could take anywhere from a month to many months. There have been cases where the bank has taken over 6 months to approve the short sale. It is hard for a buyer to lock into a loan at current rates without the Bank's approval of the short sale amount. Many times the short selling banks will not approve the work needing to be completed, such as termite work or structural repairs to the home. Sometimes the Buyer's loan will be dependant on the completion of this work, especially for FHA and even certain conventional loans, meaning these types of loans will not be available to the buyer. With such a lengthy process the Buyers can easily become discouraged, may no longer qualify for the particular loan they were seeking, or may feel the house isn't worth their original offer.
As long as the buyer is prepared for the hassles and time delays associated with purchasing from a Short Sale or Bank Owned property they can get a good deal. However, even more important than just finding a great deal, Buyers are now faced with a majority of the inventory falling into this segment. In fact, short sale and bank owned homes contribute to a significant amount of Camarillo's housing inventory. After reviewing recent transactions for Camarillo over the last 6 months it turns out that 92% of conditional or pending sales are Short Sales or Bank Owned. 92%! Clearly you can see how the delays caused by the banks are affecting buyers and the market in general.
Further, 30% of active listings and over 50% of final transactions are Bank Owned or Short Sale properties. This means that there is a high probability that some of the actives will eventually turn into bank owned or short sales if they can not sell in a reasonable amount of time or come to terms with the bank. What this means is, Short Sales and Bank Owned properties can no longer be viewed just as golden opportunities, they are what today's Buyers will predominately have to contend with.
With all this being said - don't forget the pricing of Bank Owned and Short Sale properties have contributed to the value decline of resale and new homes. This means that there can be added benefits for buyers when purchasing resale or new homes. In the case of new homes, Builders will often offer large incentives, like buying down loan interest rates or providing luxury upgrades for little to no extra charge.
Despite the state of our current economy, Ventura County is still a desirable place to live and people are still looking to buy properties. There is always opportunity within the real estate market. Real estate is always in demand & individuals always have to buy and/or sell - whether it is relocation, downsizing, upsizing, etc.
