The Boulder Home for Sale Next Door is a Foreclosure – What Does that Mean?

What does it mean when a home is a foreclosure? Foreclosure is the legal process by which a borrower in default is deprived of his/her interest in the mortgaged property. When a home is foreclosed on the ownership usually reverts back to the lending institution. People used to think home foreclosure was just a problem for down and out folks, and those with bad credit. Not so anymore. The financial profile of borrowers who experience foreclosure now includes prime borrowers, as even the most credit-worthy folks face economic hardships in the current economy.

What does it mean for a neighborhood when one or more homes go into foreclosure? Foreclosure has consequences beyond those felt by the distressed homeowner. Neighbors will experience a decline in home values, loss of equity and the increased possibility of vandalism and theft. Additionally, the effects of foreclosure on the surrounding community include a reduced taxpayer . This could mean higher property taxes and/or reduced community services and amenities.

If you know a homeowner at risk of default or who has defaulted on their mortgage, also know that there are agencies who can help distressed homeowners avoid foreclosure. Colorado established the Foreclosure Hotline (1-877-601-HOPE) that connects callers with local HUD approved housing counseling agencies. Nationally, homeowners may find HUD approved foreclosure avoidance counseling agencies by visiting the HUD Foreclosure web page.

Homeowners in a distressed mortgage situation should be proactive and get advice as soon as they think they might be in trouble. Contact the counseling agencies listed above, as well as a local real estate professional who can tell you what the real estate market is like in your neighborhood. You will need to know how easily your home would sell under current market conditions and the likely sales price as compared to your mortgage amount.

Information in this article generously provided by:
Shauna Steingrebe
Broker Associate, Colorado Landmark, Realtors
303-588-1721 (direct)

Foreclosures and Bank-Owned Properties in Boulder County

There were conflicting reports this week about the foreclosure activity in Boulder County. The first report that came out was a national report by RealtyTrac stating that the number of foreclosures in our area was DOWN by 20% over the first quarter of last year. A separate set of figures from the Boulder CountyPublic Trustee’s office tell a different story, one with a 5% INCREASE in foreclosure activity for the same period. Different metrics used for calculations and a possible seven- to 10-day delay in the collection of information could account for the difference in statistics.

Regardless of the numbers, it is safe to say that most parts of Boulder County have been, by comparison to other parts of the country, lightly hit by the foreclosure glut. That is somewhat of a disappointment for those folks that are trolling around, Trulia and other internet real estate sites looking for bottom of the barrel deals. If you want to pick up a bank-owned property in Boulder County you will need to look at the north end of the county and shop around in Longmont, because that is where approximately 70% of the bank-owned, or REO properties are.

As the data shows, the number of REO properties sold in the 1st quarter of 2009 is down 30% from the same period in 2008, and down almost 14% from the same period in 2007. Prices of bank-owneds in 2009 have crept up only slightly from 2008. I haven’t yet studied the statistical correlation between the number of foreclosures and the REO sales in a given period. However, there is usually a lag between the two as after the bank takes ownership of the home often there are things like cleaning, and repairs and improvements necessary to make the home saleable, and the time for these tasks varies from property to property.

Over 60% of those properties were sold at prices below $200,000. This is great news for first-time homebuyers interested in Longmont who want to take advantage of historically low interest rates and bargain home prices. It’s also a great time to pick up a rental property if you are interested in investment opportunities.

For those bargain hunters still holding out hope that they can pick up a bank-owned steal in Boulder you had better be able to act fairly quickly. For 1st quarter 2009 there were only six REO sales in the city of Boulder. One property up on Flagstaff Mountain took over 200 days to sell, but for the remaining five properties the average days on market (DOM) was a quick 34 days. For the same period for ALL homes sold in the city of Boulder the average DOM was 139 days – quite a difference! The moral of the story … be ready to move on a dime if you have any expectations of buying a property of this type in the city of Boulder.

Another way you can increase your odds of obtaining a bank owned home is to find a realtor that actually lists and sells these homes for a banking institution. These realtors get early notification from their bank clients as properties become available and have exclusive access to the bank’s inventory before they place properties in the MLS and start marketing them. It’s the good old “inside track”. Realtors with bank-owned experience also have knowledge of the bank’s procedures and can walk you through the sometimes complicated process.

If you would like more information about purchasing a bank-owned property don’t hesitate to contact me and I will connect you with a realtor with specific expertise in REOs.

Pam Metzger
Director of Relocation and Business Development
Twitter = @pmcolorado

Understanding Short Sales – A Good Option for Homeowners in Trouble

Most of us in the real estate business (and probably most people in America) didn’t know what the term “short sale” meant 2 years ago. Now it is a topic that appears in our business on a daily basis, and we are all working hard to stay up to date with the latest information to help our clients.

A short sale is an agreement from your lender to accept less than the amount you owe on your mortgage and release the lien on your property so you are able to sell it and move on. The short sale process can take, on average, 4-6 months and requires a lot of patience, but there are steps that can be taken to make the process easier.

If you are a seller and you have fallen behind on your mortgage payments, tell your Realtor right away. As with all real estate transactions, it is important to work with someone who knows and understands the process. Your Colorado Landmark Realtor can give you a checklist of the items that should be completed and submitted to the bank upon listing your home. Once you receive an offer on your property, your Realtor will help you submit it to the lender along with other required documentation to help facilitate the sale as quickly as possible.

By the time they have reached the point of becoming delinquent with their mortgage payments, many sellers are tempted to just walk away from their mortgage and allow the bank to foreclose on their property. There are several reasons why this is a bad idea.

  • A foreclosure can negatively impact your credit score by 250 – 300 points, and it will remain on your credit history for up to 10 years.
  • A homeowner who has had a foreclosure is ineligible for a Fannie Mae backed mortgage for a period of up to 5 years, and has to disclose a foreclosure in the last 7 years on any loan applications.
  • Having a foreclosure on your credit history can make it difficult for you to qualify for any other type of loan, and some employers will even use this information to re-assign or terminate employees.

Instead, if you take the time and effort to get your house sold through a short sale, it will most likely impact your credit score by only 50 or so points, and you are able to qualify for a mortgage and purchase another home after only 2 years. Not to mention that you can sell your home and move out of your neighborhood with dignity, and feel as though you did everything you could to protect your family’s future.

If you are a buyer and you are interested in purchasing a property that is being sold as a short sale, you will also need to be patient. It is important to work with a buyers agent who has experience with short sales. New post coming soon: tips for buyers interested in short sale properties!

The short sale process can be stressful and frustrating, but working with an experienced agent will make it much easier for you every step of the way. At Colorado Landmark our real estate sales associates strive to be up to date on the latest real estate trends and market information. Our sales associates regularly pursue continuing education opportunities to reinforce their expertise and knowledge. If you have any questions or are ready to sell your home, please give us a call.

This blog entry written by:

Jennifer Fly, Broker Associate, Colorado Landmark Realtors

303-506-0253 (cell)