Temecula Real Estate Buying Before You Walk Away

I had an interesting call yesterday regarding a situation facing many people in today's real estate market. This person has been trying to sell his home for over a year with no bites. I'm sure that sounds familiar to many. Because he needs things in a home that he didn't when he purchased his present home he wants to buy something bigger. The prices are so good in some areas he can get a bigger home for less than he spent to buy the one he's in now. So he came up with a plan. Purchase the bigger home then walk away from the old one. Now, because I have know idea of his financial situation I don't know if he'll even qualify. He is current on his present home and has excellent credit but no money down (I'm assuming).

He'll present his present home as a rental and once the new home has closed escrow he'll simply let the old one go back to the bank. But can he do this and what are the ramifications?

I hate questions like this because things are not always as they are represented to you...but in California when a home is foreclosed on the bank sells and has not recourse to approach the borrower for any differences in price between what the borrower owed and what the home sold for. This situation however, is different from many and to be honest I don't know if the situation changes the rules. One thing I do know is his credit will be ruined for years. But with the current state of many peoples finances, bad credit is going to be present everywhere and may start to be viewed differently with credit scores below 600 becoming a more acceptable score . Who knows?

Personally I think this is a moral dilemma rather than a financial one. After all, he can obviously afford his current payments, he just wants a bigger house at a better price and who doesn't? But most of us won't attempt this route in order to get what we want.

Buying Temecula Real Estate: Foreclosure or Short Sale

It's a buyers market and you're a buyer. You want the very best deal you can get. There are loads of homes for sale; over 1000 in Temecula alone. So where do you start? That question is easy. Find a good buyers agent and tell them what you're looking for. Let them do the work and present you with their findings. Chances are some of the homes they find will be bank owned homes and these are usually among the lowest priced. There will probably be a few short sales on the list also and they may see like a good deal also. But each of these presents their own set of problems.

Foreclosures

Bank owned homes are homes that have already gone through the foreclosure process and now the bank wants to get rid of them. The bank has contacted one of their agents, received a brokers price opinion and now the home is for sale. If you put in an offer on this house, make sure you have a buyers agent, never use the listing agent. The listing agent usually has an ongoing relationship with the bank and may not be completely committed to you as the buyer. So don't sell yourself short, get a good agent to represent only you.

Bank owned homes will be sold AS IS which means you can do a home inspection but the bank will not do any repairs. Most banks will have very strict time lines as to how soon you need to have your home inspection in order to back out of the deal and not forfeit your deposit. So 5 days for inspections is not unusual. The bank will want proof of funds upfront and will not approve the offer until they've seen this information. They can take several days to accept an offer so be prepared for a wait. As part of their acceptance the bank will have it's own addendum, that the buyer will need to sign. One of the conditions in the addendum will be a late fee accesses on escrows that close after the closing date. These fees can range from $100 and up and have additional per day charges as well. These can add up quickly, so get a 45 day escrow if possible with the intentions of closing in 30. This will give you sway time for unexpected delays.

Short Sales

Short sales can be deceptive. Often a short sale will read contingent on bank approval This means that what ever is in the MLS as far as price may not necessarily be what the bank is willing to accept. A short sale is where the owner still lives in the home, he may or may not be making payments, he needs to sell his house but will not be able to sell for what he owes. In a short sale the bank has final approval not the owner. The listing agent most often has arbitrarily put a sale prices (often low) in the MLS, hoping to attract a buyer and this usually works. The problem arises when the bank doesn't want to sell that low and negotiations start between the buyer and the bank. This can be a very lengthy process and the end result can often be weeks of wasted time. If you want to attempt to purchase a short sale the key is understanding it can be a very lengthy process with an outcome that is not what you were hoping for.

Whether you buy a short sale, a pre-foreclosure home, a bank owned home, or a seller owned home, make sure you have a knowledgeable agent that can work with any of these scenarios. The more complicated the transaction the more things can go wrong and the more the transaction can cost the buyer time and money. So do yourself a big favor and get a good buyers agent.