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  1. 1. So the $8,000 first-time home buyer tax credit came ro an end on April 30, 2010. Lots ofhome buyers got to take advantage of it, and for many others, the timing wasnr right - or theydidnt find just the right home within that time frame. If youre among rhem, heres the goodnews: its still a great time to buy. In fact, as one door closed, several orhers, along with manywindows, opened.The opportunity for a great deal in todays 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 prcperties: the term refers ro rhemortgage financing on the home, not the home itself. Distressed properties may well be inperfectly fine shape.But even so, why would anyone seek out a distressed property?Two reasons: Price: Price is the Lriggest motivating factor. Short sales and bank-owned prope rties sell for an average of 20 percent below market value, and sometimes much more. Choice : A recent Kf survey revealed that 45 pe rcent of all homes sold in the United States are currently "distressed properties," and an estimated 300,000 foreclosures are entering the market each month. Distressed properties have entered the mainstream ol real estate transactions. Bank-owned properties and underv/ater mortgages represent a drag on the real estate market. Every time one is purchased, the market moves that much closer to recovery. ,]f-ri l l
  2. 2. ofren, distressed properties are in excellent condition and in very desirable locations. Homeowners in every price bracket ar€ affecred by the economy. Bidding uars happen in some markers, but they main-ly occur in the most distressed ones. As in any marker, the most competitive offers are mosr likely to win. FHA loans are The key to streamlining the loan and avoiding surprises is to work with an experienced real esrare agent and a lender popular with first* who regularly handles distressed properry transactions. time buyers of The ilmeline for short sale transactions is tightening and REo transactions tend to occur within a faster time frame than the distressed properties traditional home-buying process. and represent 55 Foreclosures are happening in record numbers and, seilers are percent of all first- uery motiuated. trme rnortgages,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 consecutive months.2. Sho.rt sales orfure-foreclosures,"where agents negotiate with banks ro accepr a sales price and loan payofF that is less than the morrgage amount. Short sales occur in instances where home sellers are "underwater, on their morrgage, which means that the amount of their currenr mortgage exceeds the market value of the home. .ta ,(-1 r..l l). i: U l:-) f iO GOCf r-alA l.J l-c lAY.5 1.1A3.{a-i- Lrf :!i
  3. 3. Distressed properties account for 45 percent of total home sales when viewed as anational average. California, Nevada, Arizona, IMichigan, Virginia, Georgia and Fiorida lead theUnited States in distressed property sales. rt WA MT fr *r OR NH MA RI NJ DE MD ....,1..1:., MORE 4t-50% 3140% 7l-30% I J-20% r0% oR NOTHAN 50% LESS RESPONDENTS
  4. 4. The surge in distressed properties entering the markethas boosted affordability. In 2AA9, there was a significantuptick in home sales among first*time buyers.Iii 2009:47 percent of all REO purchasers and 52 percent of all shortsale purchasers were between 18 and 35 years old. Married couple 53oia 574/o 1-n/ 1 1n/ Single malc r/"/o tt"/o Single female 13o/a l5a/o Married couples account For more than 50 percent of distressed property purchases, but be iow-market bargains are open ing home ownership opportunities to an increasing percentage of single men and women. 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 re nt" was a calls for specialized no shortage of deals to be prime motivatol 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, sefting realistic ! distressed property sold investment. Distressed expectations, and for 2A 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.