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Opportunity
  Is Knocking
 Your guide to the ins and outs of
nding a good deal in today’s market



                                      KELLER WILLIAMS REALTY
What now?
     So the $8,000 first-time home buyer tax credit came to an end on April 30, 2010. Lots of
     home buyers got to take advantage of it, and for many others, the timing wasn’t right – or they
     didn’t find just the right home within that time frame. If you’re among them, here’s the good
     news: it’s still a great time to buy. In fact, as one door closed, several others, along with many
     windows, opened.

     The opportunity for a great deal in today’s real estate market is showing up in new ways, namely,
     short sales, foreclosures and bank-owned properties – collectively known as “distressed properties.”

     Here is the main thing you need to know about distressed properties: the term refers to the
     mortgage financing on the home, not the home itself. Distressed properties may well be in
     perfectly fine shape.

     But even so, why would anyone seek out a distressed property?
     Two reasons:
              Price:
              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.
                                                                                                                    45%
                                                                                                                     of al
                                                                                                                           l
              Choice:                                                                                               sold homes
                                                                                                                          in th
                                                                                                                   Unit         e
              A recent KW survey revealed that 45 percent of all homes sold                                             e
                                                                                                                  are c d States
                                                                                                                       u
              in the United States are currently “distressed properties,”                                        “dist rrently
                                                                                                                      resse
              and an estimated 300,000 foreclosures are entering the                                            prop
                                                                                                                     ertie
                                                                                                                              d
              market each month. Distressed properties have entered the                                                      s”
              mainstream of real estate transactions.




                                                     Bank-owned properties and underwater
                  omehe
             Bec of t
                                                     mortgages represent a drag on the real
                                                     estate market.
             par t lution!
               so                                    Every time one is purchased, the market
                                                     moves that much closer to recovery.


kw      YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T               1
What do I need to know about buying
        bank-owned or pre-foreclosed property?

     • Often, distressed properties are in excellent condition and in
       very desirable locations. Homeowners in every price bracket are
       affected by the economy.
                                                                                                     Financing facts
     • 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.                                                    FHA loans are
     • The key to streamlining the loan process and avoiding surprises                               popular with first-
       is to work with an experienced real estate agent and a lender
       who regularly handles distressed property transactions.                                       time buyers of
     • The timeline for short sale transactions is tightening and REO                                distressed properties
       transactions tend to occur within a faster time frame than the
       traditional home-buying process.                                                              and represent 55
     • Foreclosures are happening in record numbers and sellers are                                  percent of all first-
       very motivated.
                                                                                                     time mortgages.


     Distressed properties fall into two broad categories:

     1. Foreclosures or REOs (real estate owned), which
        have become the property of the bank due to the
        homeowner failing to pay the mortgage for several                                          buyers financed
                                                                                                                hase
        consecutive months.                                                                      their REO purc
                                                                                                                 an
                                                                                                  with an FHA lo
     2. 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.
                                                                                                      buyers financed
                                                                                                                       their
                                                                                                      short sale purc
                                                                                                                      hase
                                                                                                       with an FHA lo
                                                                                                                       an




kw      YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T          2
How does your state rank?

     Distressed properties account for 45 percent of total home sales when viewed as a
     national average. California, Nevada, Arizona, Michigan, Virginia, Georgia and Florida lead the
     United States in distressed property sales.




                 HI




                            AK




      MORE                41-50%           31-40%          21-30%           11-20%          10% OR                NO
     THAN 50%                                                                                 LESS            RESPONDENTS




kw      YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T       3
Look who’s buying!

     The surge in distressed properties entering the market
     has boosted affordability. In 2009, there was a significant
     uptick in home sales among first-time buyers.

     In 2009:                                                                                                            53%
     47 percent of all REO purchasers and 52 percent of all short                                                        of married
     sale purchasers were between 18 and 35 years old.                                                                   couples
                                                                                                                        account for
                                                                                                                        distressed
                                                                                                                        property
        Marital status of distressed property purchasers:                                                               purchases


                Married couple           53%       57%
                Single male              17%       11%
                Single female            13%       15%
         Married couples account for more than 50 percent of distressed property
         purchases, but below-market bargains are opening home ownership
         opportunities to an increasing percentage of single men and women.




           The word on                                 High points                                A wise
        distressed proper ties                       of home ownership                                  choice

       Almost all distressed                       40 percent of survey                       The details involved
       property buyers – 97                        respondents indicated                      with short sales and
       percent – are looking for                   that the desire to “stop                   foreclosures are unique
       a good deal. And there are                  paying rent” was a                         calls for specialized
       no shortage of deals to be                  prime motivator in the                     expertise. Find an
       found!                                      property home purchase.                    agent committed to
                                                   Regardless of the                          guiding you through the
       While the average                           market, a home is a solid                  process, setting realistic
       distressed property sold                    investment. Distressed                     expectations, and
       for 20 percent below                        properties have simply                     streamlining your path
       current market value, the                   lowered the financial                      to homeownership.
       discounted purchase price                   barriers to entry.
       on short sales and REOs
       tends to range between 10
       and 40 percent.

kw      YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T             4

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Your Guide to Finding a Good Deal on Today's Distressed Properties

  • 1. Opportunity Is Knocking Your guide to the ins and outs of nding a good deal in today’s market KELLER WILLIAMS REALTY
  • 2. What now? So the $8,000 first-time home buyer tax credit came to an end on April 30, 2010. Lots of home buyers got to take advantage of it, and for many others, the timing wasn’t right – or they didn’t find just the right home within that time frame. If you’re among them, here’s the good news: it’s still a great time to buy. In fact, as one door closed, several others, along with many windows, opened. The opportunity for a great deal in today’s real estate market is showing up in new ways, namely, short sales, foreclosures and bank-owned properties – collectively known as “distressed properties.” Here is the main thing you need to know about distressed properties: the term refers to the mortgage financing on the home, not the home itself. Distressed properties may well be in perfectly fine shape. But even so, why would anyone seek out a distressed property? Two reasons: Price: 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. 45% of al l Choice: sold homes in th Unit e A recent KW survey revealed that 45 percent of all homes sold e are c d States u in the United States are currently “distressed properties,” “dist rrently resse and an estimated 300,000 foreclosures are entering the prop ertie d market each month. Distressed properties have entered the s” mainstream of real estate transactions. Bank-owned properties and underwater omehe Bec of t mortgages represent a drag on the real estate market. par t lution! so Every time one is purchased, the market moves that much closer to recovery. kw YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T 1
  • 3. What do I need to know about buying bank-owned or pre-foreclosed property? • Often, distressed properties are in excellent condition and in very desirable locations. Homeowners in every price bracket are affected by the economy. Financing facts • 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. FHA loans are • The key to streamlining the loan process and avoiding surprises popular with first- is to work with an experienced real estate agent and a lender who regularly handles distressed property transactions. time buyers of • The timeline for short sale transactions is tightening and REO distressed properties transactions tend to occur within a faster time frame than the traditional home-buying process. and represent 55 • Foreclosures are happening in record numbers and sellers are percent of all first- very motivated. time mortgages. Distressed properties fall into two broad categories: 1. Foreclosures or REOs (real estate owned), which have become the property of the bank due to the homeowner failing to pay the mortgage for several buyers financed hase consecutive months. their REO purc an with an FHA lo 2. 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. buyers financed their short sale purc hase with an FHA lo an kw YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T 2
  • 4. How does your state rank? Distressed properties account for 45 percent of total home sales when viewed as a national average. California, Nevada, Arizona, Michigan, Virginia, Georgia and Florida lead the United States in distressed property sales. HI AK MORE 41-50% 31-40% 21-30% 11-20% 10% OR NO THAN 50% LESS RESPONDENTS kw YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T 3
  • 5. Look who’s buying! The surge in distressed properties entering the market has boosted affordability. In 2009, there was a significant uptick in home sales among first-time buyers. In 2009: 53% 47 percent of all REO purchasers and 52 percent of all short of married sale purchasers were between 18 and 35 years old. couples account for distressed property Marital status of distressed property purchasers: purchases Married couple 53% 57% Single male 17% 11% Single female 13% 15% Married couples account for more than 50 percent of distressed property purchases, but below-market bargains are opening home ownership opportunities to an increasing percentage of single men and women. The word on High points A wise distressed proper ties of home ownership choice Almost all distressed 40 percent of survey The details involved property buyers – 97 respondents indicated with short sales and percent – are looking for that the desire to “stop foreclosures are unique a good deal. And there are paying rent” was a calls for specialized no shortage of deals to be prime motivator in the expertise. Find an found! property home purchase. agent committed to Regardless of the guiding you through the While the average market, a home is a solid process, setting realistic distressed property sold investment. Distressed expectations, and for 20 percent below properties have simply streamlining your path current market value, the lowered the financial to homeownership. discounted purchase price barriers to entry. on short sales and REOs tends to range between 10 and 40 percent. kw YO U R G U I D E TO T H E I N S A N D O U T S O F F I N D I N G A G O O D D E A L I N TO D AY ’ S M A R K E T 4