Buying a Foreclosure or Short Sale Home In today’s Austin, Texas real estate market there are plenty of opportunities to buy homes that are “foreclosures,” “short sales,” or “HUD” homes. Lower-income neighborhoods seem to have the most foreclosures, but owners in all price ranges can find themselves facing foreclosure or a short sale situation. A lost job or a medical emergency can be what it takes to thrust an owner into a position of not being able to keep up with his mortgage payments. You may find a good deal on one of these homes, or on a home whose owner has not reached this point yet. Short SalesA short sale (oft referred to as pre-foreclosure) comes about when a home owner needs to sell his house, but cannot sell it for what he owes the lender. The term used to describe this is being “upside down.” The proceeds of the sale will be “short” of the amount needed to pay off the loan and to cover the costs of the sale. In this type sale, the owner must reach an agreement with the lender prior to the sale, because the lender(s) will take a loss on the amount owed. A short sale may be a plus for a lender (versus a foreclosure) because its costs to repossess and sell a foreclosure would be higher. Also, since owners usually still live in these homes, they may be in better shape than foreclosed homes. Owners are required to provide prospective buyers with a disclosure of the home’s condition. A short sale, however, typically takes months to close. Finding out what is happening on the lender side of the transaction is often difficult. If you are interested in purchasing a short sale property, you may get a good buy, but get ready to exercise a lot of patience. You need a Realtor® who is versed in short sales on your side. HUD HOMESOne of the most common foreclosures is the “HUD” home. These homes are offered initially to the public (not to investors) for 10 days. (If HUD receives no acceptable bids in the first ten days, the bidding is then opened to investors.) Bidding on these homes is done electronically through a Realtor® who is registered in the HUD (Dept. of Housing and Urban Development) system. Bids are usually closed at midnight on a Sunday. Since no bids are considered until the bidding is closed, you may submit a bid at any time in that 10-day period. HUD normally chooses the bid that nets it the most money. HUD homes have the reputation of being great disrepair (fixer-uppers), but some have been kept well. HUD homes are pre-inspected. The reports are available online for your review prior to bidding. These homes have also been appraised prior to being listed for sale. If you want an inspection of a home you successfully bid on, be aware that you must pay to turn on utilities for the inspections. REO Homes REO (Real Estate Owned) HOMESREO is a term used to describe non-HUD homes that have been repossessed by lenders. They are also called foreclosures and “bank-owned.” Foreclosure is a last resort for banks and other lenders. They do not want to repossess homes since owning Austin area real estate is not their business, and the costs of selling them are high. These homes are also found in varying conditions. It is not unusual for disgruntled owners to take their anger out on their homes before they move out. Thankfully, not all people take this route. I have seen foreclosed homes in the Austin, Texas area that run the range of “the good, the bad and the ugly.” Lenders are not required by state law to do any pre-inspections or to provide a seller’s disclosure to potential buyers. Hence, the expense of utility turn-on and inspections is left to you. Repairs may or may not be negotiable with a particular lender. It is best to work with a Realtor® in negotiating the purchase of a foreclosure property. Other Options for a Finding a Good Real Estate Buy in Austin, TexasThere are other options available to you in the Austin, Texas area. Some area home owners are in situations that do not require a short sale, or are not in danger of being foreclosed on by their lender. They simply need to sell their home because they have moved to a new job or to another part of the country, had a family emergency, etc. They may be paying two mortgages and see their money running out. Their home may have been on the market for an extended time. For these owners, selling their chunk of Austin real estate quickly and getting out from under their mortgage may be a high priority. They may be ready to make a deal that will be better for you than purchasing a foreclosure or short sale home. Search for a Short Sale, HUD Home, a Foreclosure, or Other Austin, Texas PropertyThe information on all homes listed for sale in the Austin Texas MLS is available online on the home search page of Heart of Austin Homes.com. What is not available on searches like these is the ability to search specifically for homes that are being sold as short sales, by HUD, or as foreclosures. If you are interested in having an MLS report on homes like these sent to you by email, please give me a call (512.913.1557). Or, drop me an email via the Contact Me page on this site.   Click here to search homes for sale in Austin, Texas.
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