Why Are Foreclosures Listed As Such? | REALTOR.com? Blogs

Q: Why are foreclosed listings, listed as such? Is it a legal requirement? Stating that it is a foreclosure would seem to invite and encourage low-ball offers. Is that the purpose?
?Anonymous, Childress, TX

A: No that is not the purpose. It is of interest to most buyers to know that the property is a foreclosure because most are sold in ?AS IS? condition including the fact the seller, now being a bank owned property, is not required and does not have the ability to complete a property disclosure. That is just one of many issues. Most will not do repairs or allow for repairs. They are extremely strict on time frames to do inspections, to close?etc. Most of their contracts over ride the Realtors? normal contracts and many state the bank is not responsible for many things.
Lana Lavenbarg is a Realtor? with RE/MAX Ideal Brokers, Inc. in Grants Pass, OR.

A: When you put a property on the market with an asking price; it means that if someone comes to you with that much money you are obligated to sell it to them. If you are in foreclosure, you no longer have control of that sale. The buyer should know that up front.

A seller must be ready, willing and able to sell. Once you step into the short sale, or foreclosure sale the bank has the power to sell. It means time is involved to get approvals to move forward, and there is no guarantee when all that will happen. Some short sales can take 3 mos, others can take over a year.
Joan Flood is a Realtor? with Dagmer Chew HomeStead Real Estate Co in Cape May, NJ.

A: In real estate, sellers must disclose all ?known material facts?. There are different legalities and requirements with short sale and foreclosure properties than there are with ?conventional? sales.

The purpose is to DISCLOSE the fact that the property is in financial distress and owned by the bank or about to be owned by the bank.
Denise Shur is a Realtor? with 1:1 Realty in San Jose, CA.

A: The purpose is not to invite low-ball offers. The primary reason is to alert buyers the the seller is most likely a bank, and dealing with a bank is much different than dealing with an individual seller. Trying to buy a property in the foreclosure process can be frustrating. More than once, buyers have had short sales approved by a bank, only to discover that the property was sold at foreclosure a day or two before closing. The process takes longer and can be more costly. Some buyers simply don?t have the time, money, or patience to try to buy a property in foreclosure (or even one that was recently foreclosed). Stating that the property is a foreclosure or short sale gives buyers fair notice as to what they can expect so that they can decide if they even want to consider the property.
Phil Lunnon is a Realtor? with Lunnon Realty in Lakewood, CO.

A: Material facts need to be disclosed, and a property have been foreclosed upon is a material fact. There are several reasons for noting properties as being foreclosures:

Seller will have little or no knowledge of the property, its condition, and information about any deficiencies or special attributes. (A homeowner would be aware of the little extras which make the home so livable.)

Buyers and their agents are informed they will be following the current owner?s specified practices in regards to showing/offers/incentives/repairs.

Some buyers are actively seeking foreclosures, considering them to be the best values for purchasing?and ignoring the fact that short sales and traditional sales have to be priced to be competitive with other homes on the market, whether foreclosures or not.

If you see a Freddie Mac/HomeSteps foreclosure, you will most likely find that some inspections have already been completed and are available for the buyer to review prior to purchase; Freddie Mac also offers some ?incentives? for those purchasing for their own residential use, including an allowance for a home warranty. When possible, these homes are move-in ready. Check HomeSteps.com specifically for Freddie Mac homes in your area, then look up those homes on Realtor.com for additional information and details.

Some banks (fortunately fewer, compared to three or four years ago) simply list the property and will do no inspections, no repairs, and provide no incentive to the buyers. These properties usually are of more interest to investors, as buyers may find numerous repairs are needed.
Debra Kroon is a Realtor? with Yosemite West Real Estate in Yosemite, CA.

A: Some of the reasons so that buyers are informed that they are purchasing the property from a seller that has never seen the property, may not be open to repairing the property, may have a different purchase agreement and time frames from a ?regular sale?. In some states a seller that obtained a property via foreclosure may also have limited disclosure requirements and there may be a redemption period.

In other words informing buyer there may be more risk involved in this purchase vs a regular purchase.
Teri Andrews Murch is a Realtor? with Lyon Real Estate in Auburn, CA.

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Related posts:

1. Looking Beyond The Distressed Sale For A Deal In Today?s Real Estate Market
2. What Does ?Active/Pending Short-Sale? Mean On A Listing?
3. How Do I Make An Offer On A Short Sale?
4. What Buyers Need to Know About Short Sales
5. Demystifying The Short Sale Process

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