There are a lot of opportunities in the current real estate market here in Southeastern Connecticut...
With the current interest rates for thirty year fixed mortgages between 3% and 4% you have a lot more buying power, therefore the ability to buy a larger or higher valued home with a lower interest rate for the same monthly mortgage amount. You can also have more buying power with a home that is in a compromised financial situation, such as a short sale or foreclosure.
A home that is in a short sale or foreclosure situation may offer you more buying power depending on the condition of the home.
Many homes which are in a short sale situation can offer you a very good value, especially if you are looking to buy as a first time homeowner or if you are looking to invest. A home in a short sale situation often has the homeowner still living in the home, so the home is occupied and usually being cared for, and in the winter, heated.
A short sale is a home that the owner still owns, but the homeowner may be delinquent in their mortgage payments. If that is the case the lender must approve the sale/offer/purchase price of the home. A homeowner does not have to be late in their payments for a short sale situation to occur. A homeowner could be in a short sale situation because the value of their home is currently worth less than the amount of money they have invested in it, i.e their mortgage note.
A home that is REO, Real Estate Owned, is a bank owned property that has been foreclosed on and taken back by the lender.
A Foreclosure action is taken when a homeowner has stopped paying the mortgage for a specific period of time. They are usually vacant, and here in Connectiuct, often go through winters vacant with the heating/plumbing system in a winterized state. (Winterized means that the hearting pipe have been drained and all water supply is turned off to prevent damage to the heating system by pipes freezing, etc. when there is no heat source in the home). Oftentimes, though, heating pipes have already suffered damage because winterization was not done in time to prevent frozen pipes.
In essence you still need to have a licensed home inspector evaluate the homes condition and systems and to see if it is financially feasible for you to go forward with the purchase of the home.
These homes are not for everyone, but they are everywhere and the opportunities are worth pursuing.
If you are considering buying a short sale, take the time to speak to a Realtor who is specialized in Short sales and foreclosures. It is also a good idea to obtain legal advice from a Real Estate attorney and accountant.
Camille Taylor, SFR, CRB, GRI