Types of Sales

 

Agency Sales:

provide the greatest protection. Agents require full disclosure documents and insure documents and inspections are made and completed. Agents represent parties to insure smooth and accurate closure. An Agent works on behalf of parties to represent the best interest of parties.

For Sale by Owner:

is a private party sale, does not require disclosure, and tends to be personal in nature. Whatever is negotiated goes. More difficult to negotiate because you’re dealing directly with principal. Needs a lot of diplomacy.  Would suggest legal assistance to insure transaction is completed properly.

Foreclosure / Trustee Sale of Deed:

is when lender or Benificary is selling their interest in a deed of trust to a third party due to lack of payment by the trustor.  Trustor must be 90 days delinquent and notice of sale must be given by the Trustee.  No disclosure is required; inspection is given prior to sale, generally “AS IS”. Owner may or may not have been evicted.  Most likely an auction on court steps will take place.

REO:

is a bank owned property, generally sold in “AS IS” condition and vacant. Lender has full discretion, may accept multi offers, no disclosure required, 10 day inspection after offer.  Buyer can terminate offer after inspection for valid reason only. These are properties banks  have offered at auction but bids weren’t good enough to make a transfer.  They want to get rid of these properties and will negotiate on them.

HUD

is a property taken back by the government who held the note and due to lack of payment on the note, the lender has been reimbursed and the Government now owns the home.  These homes have full disclosure and have had only general repairs made to them.  10 day inspection after offer.  All homes have a full inspection and appraisal completed. Sales are done via auction online and are time and price sensitive. They generally go quick.

Auctions:

may be private or lender owned properties, generally sold in “AS IS” condition and vacant. A $10,000 deposit is required to participate in the private auction, inspection prior to sale, time sensitive. No disclosure required, deposit refundable if no sale is made.

Shorts:

are sales where the owner still retains the title to the property but is unable to make payments on the note.  The lender agrees to reduce the amount of the note to a third party and the owner agrees to give up all title, interest and equity.

Generally sold in “AS IS” condition and may be occupied. Owner generally loses all equity and bank loses a % of loan. Lender and owner must agree on deal. Time consuming to get to acceptance of offer.

10 day inspection after offer accepted. No disclosure required. Lender has full discretion.

These are very difficult to do. In many cases the agent makes a deal with the owner to sell the house at a price before the lender is aware of it. Lender may or may not approve of the offer. Owner must submit a letter of hardship showing distress in making the payments. Lender can take 3 to 6 months to approve.

The Lender orders a BPO (Broker Price Opinion) to determine if the offer is close to market value.

If anything changes in the offer process, it starts over. Generally multi offers waiting in second position. Investors may make multi offers on numerous homes in hopes of picking one up cheaply. This may have the effect of driving the price up. Generally homes at such low prices are bidded up by offers to the bank owed price when it’s all done. The price the property is listed at may or may not be the sales price. It’s all up to the bank.

PreForeclousures:

These are homes that are delinquent in mortgage payments but have not yet been foreclosed on. In many cases they are upside down and even if you could make a deal to buy the home in pre foreclosure, it wouldn’t be worth the mortgage price. That’s why many are left to go to foreclose.  These homes are sought out by brokers to sell as Shorts.


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