The facts about getting a good deal in El Paso Tx on a Foreclosure

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The facts about getting a good deal in El Paso Tx on a Foreclosure

It’s still a great time to buy. The opportunity for a good deal in today’s real estate market can be found in some short sales, foreclosures and bank-owned properties  – also known as “distressed properties ” and even in resale homes.  The term "distressed property" refers to the mortgage financing on the home, not the home itself. Many distressed properties require considerable repairs and are generally offered on an "as is" basis.

Why would anyone seek out a distressed property?

Two reasons:

Price is the biggest motivating factor. Short sales and bank-owned properties sell for an average of 20 percent below market value, and sometimes much more.

Choice: A recent survey revealed that 45 % of  homes sold in the United States are currently “distressed properties,” and many more foreclosures are entering the market each month. The number of available foreclosures are much lower in El Paso but  the national market is dragging down resale prices in this market.

What do I need to know about buying a bank-owned or pre-foreclosed property?

  • Some distressed properties are in excellent condition and in very desirable locations. Homeowners in every price bracket are affected by the economy. 
  • Bidding wars happen in some markets, but they mainly occur in the most distressed ones. As in any market, the most competitive offers are most likely to win. 
  • The key to streamlining the loan process and avoiding surprises is to work with an experienced real estate agent and a lender who regularly handles distressed property transactions. 
  • The timeline for short sale transactions is generally very long and tend to occur within a longer time frame than the traditional home-buying process. 
  • Foreclosures are happening in record numbers and sellers are very motivated. 
  • Long term interest rates are lower than they have ever been.

Distressed properties fall into two broad categories:

Foreclosures or REOs (real estate owned or bank owned), which have become the property of the bank due to the homeowner failing to pay the mortgage for several consecutive months.

Short sales or “pre-foreclosures,” where agents negotiate with banks to accept a sales price and loan payoff that is less than the mortgage amount. Short sales occur in instances where home sellers are “underwater” on their mortgage, which means that the amount of their current mortgage exceeds the market value of the home.

Financing facts: 

FHA loans are popular with first-time buyers of El Paso properties and represent 1/2 of all first-time mortgages.

Conventional lending is the traditional method of financing a distress property purchase due to the "as is" condition on the property.

Who’s buying!

The surge in national distressed properties entering the market has boosted affordability. In El Paso, there was a significant increase in home sales among first-time buyers looking to make a deal on a short sale, foreclosed or bank owned home. Unfortunately, many first time buyers are unfamiliar with the process and fail to proceed to closing. In El Paso, Tx less than half of the short sale offers made by first-time buyers are successful.

Distressed property purchasers by marital status:

  1. Married couple  make up 53%
  2. 17% are Single male 
  3. Single female make up 13% 

40 percent of respondents, in a national survey, indicated that the desire to “stop paying rent” was a prime motivator in the property home purchase. Regardless of the market, a home is still a solid investment. Distressed properties have hugely lowered the financial barriers to buying.

The details involved with short sales and foreclosures are unique and require specialized expertise. Find a distressed property Buyers agent committed to guiding you through the process, setting realistic expectations, and streamlining your path to home ownership.