I’m neither Democrat or Republican, but this video explains a lot on how our real estate housing market and current economic crisis came about. You’ll probably need to use the pause button throughout the video since it moves fast… watch it and post up your thoughts and comments.

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All the real estate talk in the DC metro region nowadays is about finding great deals. Most of the deals can be found through foreclosure homes in Northern Virginia and Washington DC. However, the process can be more complicated and risky than one may think. Here are some things you should know:

There are three different stages of foreclosure, each of which presents different opportunities for buyers. The first step is to figure out which one makes the most sense for you.

Pre-foreclosure

A home goes into pre-foreclosure when a borrower has fallen behind on his payments, but the house has yet to be auctioned off. Homeowners are looking for a way to get the financial burden off their back. So it’s not a bad idea to look over the delinquency notices that lenders file with county courthouses when a borrower misses a payment.

Owners are usually open to doing a short sale which is when the buyer pays less than what they actually owe on the mortgage. Banks are reluctant to do these such deals because they take a loss. It can take months before a deal goes through and even after that long period of time, there is a chance that the bank will not accept it.

In this market, we’re finding that the banks are more inclined to agree to the short sales. It makes sense for them to liquidate early rather than going through the foreclosure process costing lenders around $50,000.

Do not be turned off by dirty carpets or ugly paint jobs. That’s where the best deals are.

Sheriffs’ sales

In the next stage of foreclosure, homes in default are auctioned off on the county courthouse steps. These homes can be real bargains, but the process is a crap shoot.

There are downfalls that can arise with this type of process. Bidders cannot inspect the property prior to the auction so there is no telling what needs to be fixed. You also run the risk of buying the home with liens still against it because of unpaid taxes which can jack up the cost of the home. Finally, the kicker, buyers need to come with cash ready to put down 10%-20% and pay the rest in a matter of days. So if you want to buy on the courthouse steps, you’d better be a pro.

Even after a purchase, a deal can fall through if the current owner can come up with enough cash to repay the buyer the amount of the winning bid.

Post-foreclosure

After a lender takes back a house, the property goes back on the market as what’s called an REO (real estate owned) property. These are treated like ordinary sales, listed with a broker. Typically, bargains are not as sharp.

Young, hungry real estate agents are the ones that are usually screening REOs all the time. Go out and find one and put them to work for you. These are a lot less risky because the process is so clean; the title is clear and the property is delivered vacant.

Click *HERE* to actively search for foreclosures in Northern Virgina and Washington DC

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Freddie Mac is doubling the amount of money it pays loan servicers for each successful mortgage workout among other measures to keep struggling borrowers out of foreclosure.The mortgage financier is also giving more time to negotiate workouts in states with fast foreclosure processes and will reimburse servicers for door-to-door outreach.

Freddie will pay $500 for each repayment plan and $800 for each loan modification on Freddie-owned mortgages. Servicers will receive $2,200 for each short sale where Freddie accepts less than the full amount owed on the mortgage.

In some states and Washington, D.C., the government-sponsored entity will give up to 10 months from the due date of the last payment to find sustainable workouts for strapped borrowers. These states allow a lender to foreclose in less than 10 months.

These new policies go into effect TODAY, August 1st.

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With so many homes on the market now in Northern Virginia and Washington D.C., there are a lot of deals out there. Some of these deals are short sales and foreclosures. However, most people don’t know what each entail. Yeah, the price looks incredible and you can’t wait to put an offer in. What you don’t know is that these types of homes are not a typical real estate transaction. How are you suppose to know? I mean all you care about is that it’s $100K less than the house selling down the street. To start off, I’ll dip into short sales.

About 99% of the time, the home listed as “short sale” or “third party approval”, has an attractive price that has not been approved by the bank.  In order for a distressed seller to do a short sale or sell their home in an “upside down” scenario, means that they are asking the bank to accept an amount less than what’s owed on the loan. People choose this option if they are unable to continue making payments. This method doesn’t affect your credit as bad as a foreclosure does. So let’s say a home has a real attractive price tag on it and there are 10 offers on it already submitted. The goal of the seller is to get as many offers as possible in hopes that they will keep outbidding each other. Once all offers are in and maxed out, the seller will choose one to send to the bank for approval. This process usually takes about 4 - 6 weeks. Plan on sitting around for a while twiddling your thumbs. The worst part about short sales is that after that 6 weeks, the bank can reject the offer and you have just wasted 6 weeks of searching for a home as a buyer. One more thing, the home is sold “as is” meaning that the seller does not have to fix anything that you want repaired. If you have the time to wait around, then you may want to look into short sales.

Foreclosures or REO’s (”Real Estate Owned” by the bank) are a different story. These are properties that have been acquired by the bank after they have failed to sell at a foreclosure auction. The price on the home will most likely be accepted if you submit an offer for it for full price. The amount of time it takes for these to close is approximately the same as a normal real estate transaction, 30 - 45 days. Although these homes may look great from the outside, more often than not they need some major TLC (tender loving care). In other words, like in a short sale, you have to purchase these homes in “as is” condition. This isn’t always a bad thing though. If you invest some money for new paint and carpet, you’d be surprised how much of a difference it makes. You’ll need to have an imagination when you walk into a home that turns you off right away. What I mean by this is, look around the house and see if there is any damage to the foundation, water damage or mold. If there is only cosmetic damage, it’s an easy fix. You can really take advantage of turning a huge profit if you know what you’re doing. I would only suggest buying a DC metro area foreclosure if it’s in good condition, you’re an investor, handyman, or ready to hire a contractor.

Now are you ready to search for short sales and/or foreclosures?  In Northern Virginia and the Washington DC metro region start here!

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Foreclosures are not what they used to be. Since the lending extravaganza, more and more Northern Virginia homes are falling into foreclosure because homeowners cannot afford to pay their mortgage. What does this mean? Well for starters, there are some bargains out there. Rewind a few years ago. You see, during the hot market, a lot of buyers got in over their heads. They thought because sellers were making big profits on the sale of their home, they would be able too as well. However, these sellers had purchased their properties when they were priced low. These homebuyers that purchased at the peak of the market had no idea it was the peak. Lenders were giving out loans to anyone during this time without proof of income or work history. Most of the homebuyers took out ARMs (adjustable rate mortgages) that would expire a few years later. These homebuyers had no idea that they wouldn’t be able to sell their home for a higher price in a few years. Fast forward a few years later. The ARM loans are adjusting and the mortgage payments are increasing thousands of dollars. What do the homeowners do that purchased at the peak who had ARMs? Some of them don’t pay their mortgage and the home goes into foreclosure. So with that being said, there are foreclosure homes that are fairly new out there. These foreclosures are in more desirable areas than observed in the past, and are getting scooped up by responsible buyers.

The increase in foreclosure homes can also hint at the bottom of a real estate market. Whether you live in the DC metro real estate market or plan to move there, a real estate professional can examine statistics to track the lowest foreclosure sales. Of course not every foreclosure is in a great neighborhood. You will find some of the best foreclosure deals in neighborhoods with new construction that sold in 2005-2006 that were priced above the median home price for that area. Most of the foreclosures in Northern Virginia are popping up in the suburb counties of Prince William, Loudoun and Fairfax, Virginia.

If you keep an eye out on the foreclosure market, it will give you a good idea of how well homes hold their value in your market. Who knows, you might find a great deal.

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Since record keeping began in 1963, sales of newly built homes dropped at the steepest pace throughout the country over the course of 2007. New home sales numbers totaled 774,000, which was 26% less than 2006 new home sales according to the Commerce Department. The 9.6-month supply of new home inventory for sale is a record. Since the July 2005 peak, the sales of new construction homes have plummeted 57%, and permits for construction have dropped nearly 50%. New home builders are rapidly cutting production which will help reduce the housing supply throughout the nation.

The DC Metro area is one of top hot spots for new home builders because of the high paying salaries and strong job growth. So what does this mean for home buyers? Well, for starters, the glut of new construction homes in Northern Virginia and Washington DC are breaking builders’ banks. It is a prime opportunity for savvy home buyers to scoop up good real estate at highly incentivized (apparently not a word according to spell checker) prices! Deals that were unheard of for the past 5 years (such as 6% home buyer incentives and 2 BR+den new condos in Arlington VA for $339k) are now available in highly desirable areas of Northern Virginia real estate. Many people remain pessimistic about the current DC real estate market, but the way I see it… how does the saying go- “one man’s loss is another man’s gain”… builders are hurting, so shoot ‘em while their wounded! (sorry builders). Just like foreclosures- if the seller is distressed, the buyer will be blessed (I made that one up ;).

Right now, I am informing my buyer clients that it is a great time to look for new construction homes and foreclosure homes (I’m a Northern Virginia & DC Realtor in case you didn’t know). With the builders’ incentives and highly motivated bank foreclosures, I’ve seen some pretty good deals recently that a lot of resale homes cannot compete with. Unless a seller purchased their home prior to 2003, they most likely won’t be selling their home for a profit (after selling costs) and will have less room to negotiate. That being said, if you are looking to buy a home and would like a professional to help you locate some good new home construction or foreclosure deals, give us a call at 1-888-998-ZILL (9455) or sign up for our free foreclosure list at the top of the page.

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