The Buzz about Bank Related Sales
In the past, financing was the primary function banks played in real estate transactions, but now banks have a more active role in the market. In fact, bank-related sales made up approximately 23% of single-family home sales throughout Destin, Fort Walton Beach and Niceville during January through October of 2009, and they made up 40% of home sales in South Walton during the same time.* The good news is that “bank-related” does not mean the same thing as “foreclosed properties,” so not all the real estate sales mentioned previously were foreclosures. Nearly half of these sales were actually short sales.
So, what does “bank-related” really mean? It means the lender was required to approve the purchase price in a real estate transaction. Foreclosed properties are the most commonly known bank-related sale, but there are several other types of bank-related sales that are becoming more and more common today. Here are some definitions to help you understand these sales.
- Foreclosure: The bank owns the home. The lender obtained a collateralized property when the borrower defaulted on the obligation to repay the loan.
- Pre-foreclosure: The voluntary selling of a home by a delinquent borrower to repay the loan amount to avoid the foreclosure process.
- Short Sale: The lender approved sale of a property for an amount less than the unpaid balance of its first mortgage.
- Bank-Owned: The property has been foreclosed and the bank now owns the property. The bank works to sell the home to another person.
- Real Estate Owned (REO): A term for “Real Estate Owned” by a bank.
- Negative Equity: The condition in which the outstanding principal on a loan is greater than the value of the underlying asset.
- Deed-in-lue: An agreement of a delinquent borrower to give the deed to the property to the lender in place of foreclosure proceedings. Usually the borrower is released from responsibility of any shortfall between the loan amount and the selling price of the property.
- Mortgage Default: The failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.
In all the sale types mentioned above, a buyer can usually get a good price on a property. In some cases, a bank is willing to accept less money that what is owed on the property to prevent a foreclosure. Foreclosing on a property is costly for both the banks and homeowners, so buyers can take advantage of such situations to find great deals.
Sellers are also benefiting from this market because they have more options to sell their home. If they are unable to make their home loan payments, they can take proactive steps to prevent a foreclosure. In these cases, short sales may be the best option for them because they affect credit scores less than foreclosures and relieve some of the burden the homeowners are facing.
Overall, today’s real estate market is more complicated than in the past. There’s not only a lot of inventory to choose from, but there’s also more “sale types” widely available…not to mention the complexity of price. That’s why it’s so important to seek the guidance, counsel and services of a knowledgeable Realtor who can help guide you through the buying or selling process.
ResortQuest Real Estate is the leading real estate company in the Emerald Coast because we capture and know the specifics of the local market. Our licensed agents have the tools, information and tactics needed to effectively help homeowners who are in distress. Distressed homeowners need help to find the best solution to the financial crisis they face and our associates are best suited for this role. Our Sales Team understands the area’s real estate opportunities, plus we work with banks to aid our customers with bank-related sales. Call us today to learn more about the dynamic real estate market of the Emerald Coast and how you can make the most of it!
*Based on sales data from the Emerald Coast Association of Realtors’ MLS records for January 1, 2009-October 31, 2009. For this statistic, “Bank-related” includes sale types of in-foreclosure, pre-foreclosure, REO and Short Sale.
