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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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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Are you familiar with route 66, exit 71? It’s the exit that will bring you to Fairfax Dr. and place you among the hustle and bustle known as Arlington. It seems to be the most popular place to live in Northern Virginia. Not necessarily Arlington as a whole but to be more specific, Clarendon, Courthouse, and Ballston. Convenience plays a big role when you ask any of the residents. You’re going to find mostly a younger generation roaming the streets with their dressy clothes and Starbucks in hand. The young professionals prefer to walk out of the office and convene with their peers at a local restaurant or bar for Happy Hour. Did I mention convenience? There are 4 metro stops in North Arlington which gives people an option to ditch their car and go Green. The metro can take you right into the Washington D.C. to enjoy the sites on the weekends or prevent you from having to drive so you can enjoy the nightlife.

People are willing to spend up to $2,000 a month just to rent a one bedroom place. What does this tell you? It’s the place to be and it’s going to be like this for a very long time. You have to wonder if any of these renters ever considered purchasing a home in Arlington. That $24,000 a year is just getting shoved into an abyss. Who would want to invest your money in a home so you can reap the benefits in the future? Certainly not Johnny who is notorious for racking up hundred dollar bar tabs and telling everyone to never buy a home, I mean he’s only 35 years old and has never owned a home. Since North Arlington is the most desirable place to live, it’s going to be on the expensive side. You’re looking at a 1 bedroom place for around $360,000. Yes, that is expensive but you’re placing yourself amidst the glorious surroundings and action of the city. Sure you could move 4-5 miles outside and find a 1 bedroom for $300,000 but you also can’t walk outside your home and be where you want to be.

If you’re thinking about purchasing in the N. Arlington area and will have no problems with the payments, you’re making a great investment. The real estate in this area is only going to get more popular. Home prices in this area have not seen a dramatic effect that the surrounding cities like Fairfax, Falls Church, Centreville, Chantilly, and Herndon have.

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The real estate market in Arlington VA continues to be one of the strongest markets in Northern Virginia Real Estate, check it:

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Sales Report for Northern Virginia Real Estate
Released February 11, 2008
info from Northern Virginia Association of Realtors^®

The rising number of foreclosures and short sales over the past year have dramatically affected the supply of homes on the market for Northern Virginia real estate. This has in turn, brought the housing demand down (”economics 101″), along with NOVA area home values. The average home stayed on the market 21 days longer in Jan ‘08 versus Jan ‘07. On the other hand, the recent increase in conforming loan and FHA loan limits should give a boost the the DC Metro area real estate market. We should see a good amount of activity over the next few months into Spring and Summer as home buyer confidence rises. The stars are aligned for a buyer’s market in Northern Virginia!

Dr. Stephen Fuller of George Mason University’s Center for Regional Analysis (CRA) located in Fairfax VA, noted in a report in Feb ‘08 that the regional job picture is very strong. More than 20,000 new jobs are projected for Northern Virginia each year through 2011. The report stated that of the 15 largest U.S. job markets, the D.C. Metro area showed the lowest levels of unemployment: 3% - compared with a national unemployment average of 4.8%.

*Data from the Metropolitan Regional Information System, Inc (MRIS). Northern Virginia real estate figures include data collected from Fairfax County and Arlington County, and the cities of Alexandria VA, Falls Church VA, Fairfax VA, and the towns of Vienna VA, Herndon VA and Clifton VA. (Sales figures do not include most new home construction sales and For Sale By Owner sales since the data was not entered in the MLS. Only Northern VA Realtors can access the MLS to enter the sales data)

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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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