Everyone thinks that buying a foreclosed property is the best way to get a “deal” in today’s market.  Well, maybe, but maybe not.

To get to the point of being a foreclosed property, the original owner had to stop making payments for some time.  It stands to reason that if they were no longer making payments and knew they would lose the home, that they would also no longer do regular maintenance and repairs.  Why would they?

So in most cases you can expect a foreclosure to need a little or a lot of work.

Things like air conditioning systems usually haven’t been serviced or even had filters cleaned in some time.
Small leaks may have become larger ones.
Wood rot issues have not been addressed.
If the seller was REALLY unhappy about things he may have even damaged the home, or taken away anything he could carry – including appliances, light switches, and plants.
The bank typically sells foreclosed homes “as is”, meaning they are not going to replace missing appliances or make repairs.  So the seller has to plan on being able to do (and to afford to do) all those things after closing.

Depending on what is wrong with the home, the home may not qualify for certain types of financing.  Meaning that the new buyer will have to put down a higher down payment or even pay cash for the home.

Companies that specialize in selling foreclosed homes do it because the VOLUME of transactions makes them money, not because they make very much on an individual home.  They are incredibly busy and will not have the time to answer every question in a timely manner so don’t expect the best in customer service.

All that having been said, there ARE some great deals out there on foreclosed homes if you are prepared for all the obstacles in the search for them.  The old saying “buyer beware” has never been more fitting.

New technology has just hit, and many companies, like Watson Realty Corp, have jumped on board.  Now customers will be able to look at homes for sale through their cell phones.

Watson Realty Corp has partnered with Smarter Agent®, the nation’s leader in mobile real estate technology, to provide this service to ALL of its customers!  Cell phones can now be turned into the ultimate home-hunting tool.

This mobile application is called Homes for Sale and can be downloaded to just about any cell phone.  Customers can be in any neighborhood and view detailed home information at the touch of a button.  The technology in the phone can pull up addresses and information on listings in that immediate area, including price, square footage, tax info, and other features – even photos!  Or they can search for homes in a different location.

If the customer wants more information or want to see the property, they hit “call to see” and they will immediately be put in touch with a Realtor® who can help with any listing.

It’s easy to use and best of all – FREE for most phones.  Watson customers just go to the website, www.WatsonRealtyCorp.com and look for the link.  They just type in the cell phone number, wireless carrier name and phone type, and the application will be sent to the phone by text message.  One click and the application downloads right away.

Over 120 different models of phones on Sprint, AT&T, T-Mobile, and Verizon are able to access this application and it works on the Blackberry World, Curve, Pearl, Pearl Flip, and the iPhone.

Smarter Agent® invented and patented mobile, location-triggered real estate search.  Now top companies like Watson are making it available to their customers.  Can looking for homes get any simpler?

The most obvious reason is “the market”.  Thanks to a media-driven frenzy in recent years sellers began to believe that all homes sell quickly.  Not only was that not completely true then, it’s not at all true now that the frenzy is over.

The next reason homes don’t sell (and your agent will be quick to point out) is price.  Gone are the days when you could price high and then negotiate.  Today’s buyers are not even looking at overpriced homes.  Well-priced homes attract buyers who make reasonable offers.

Unfortunately, in this market, price is a moving target.  A list price that seems reasonable today may put a seller on the high end in thirty or sixty days if the market shifts.  Then the seller is “chasing the market” as he tries to play catch-up with prices in the area.

There are a lot of creative variations on price.  Sellers may offer to pay the buyer’s closing costs, association fees, or buy down the mortgage rate.  In most cases a straight price reduction is a better strategy because the lower price may put the home in a range that has a broader appeal to prospective buyers.

No matter how the home is priced, sellers need to prepare to negotiate.  Buyers have read that they can get homes by making low offers.  Sellers shouldn’t be offended at a low contract but should counter the offer and continue to counter as long as it takes to reach an agreement.

Probably one of the most difficult problems to solve for a home not selling is the home itself.  Unfortunately, not all home problems can be fixed.  The family room that is too small by today’s standards and the backyard that overlooks the highway are negative features that can’t be fixed.  However, a buyer will be more inclined to live with the negative features when the benefit of the right price outweighs the negative. 

The next thing to do is make sure the home is available to be seen.  Whether or not you are using a Realtor to sell the home, make sure the home is available seven days a week.  Putting restrictions on showings that make it difficult to accommodate a buyer’s schedule means that some buyers will not see the home at all.

However, there are plenty of little things a seller can do that will not only make the home sell faster, but sell for a better price.  It’s called “staging”.

Think of a model home.  It’s open and uncluttered, light and airy, clean and neat.  But even the oldest home can duplicate that feeling.  Here is a checklist to follow:

1) Make any necessary repairs, even small ones.  Little things like a cracked wall outlet or big ones like an air handler than no longer works properly need to be addressed. 

2) Clean like Martha Stewart is expected for dinner.  Every nook and cranny needs to sparkle.  No dust bunnies, no stains, no dirty windows, no scuff marks on the walls.  If the paint if dingy, or even a very taste-specific color, you might consider fresh paint in a neutral lighter color.

3) There is no second chance to make a first impression.  So look outside and address how the home appears.  Enhance tired landscaping or cut back overgrown plants.  Add color if necessary with some seasonal annuals.  Make sure the lawn is treated for weeds and fertilized on a regular schedule.

4) Now the one everyone hates – pack it up or throw it out.  The longer you’ve lived in the home the more “stuff” needs to go.  If you can’t bear to part with it, store in at a friend’s home or rent a storage unit.  Clean out the closets, the pantry, the garage, cabinets, vanities, drawers, etc.  “Empty” looks bigger than “full”.

5) Now clean it off.  Remove most of the wall art you own and repair any holes.  Put away most of what is sitting on counters and tables and shelves throughout the home.  Be especially good about removing photos of family members.  Your buyer will be better able to project themselves in the home if they don’t see other faces looking back.

A true professional stager will do all this and more.  Their talents include rearranging furniture and using props and accessories to highlight features of the home the typical seller will overlook.  It may involve putting furniture into storage or making physical changes to the home but the end result is a home that will have the greatest appeal.

You may have read these things or your agent will have told you many of them and maybe added a few, like adding scented candles or potpourri to freshen rooms.  Turn on lights and open blinds when expecting a showing so that the home looks more inviting.

As a final thought, decide what your home’s best feature is and make sure you have staged the home in a way that will make that clear to your buyers.  Then they will fall in love with the home just as you did.

First of all, what is a short sale? When an owner owes the bank more on his mortgage than the property is worth, then he is “upside down”. The only way to sell the home is for the owner to bring the difference owed to the table at closing or for the bank to “forgive” the difference in a short sale.

At first glance this sounds like a good deal for everyone. The seller avoids foreclosure, the bank has a buyer who will now make payments, and the buyer, hopefully, got the home at a great price.

Here’s how it shakes out in real life. The seller still takes a substantial hit on his credit. But he does get to walk away from the property. The bank loses money, but probably not as much as if the property had gone through the foreclosure process. The buyer gets the home for the new market value, which is less than what was owed.

However, that new value IS the value. Because if the bank could have sold it for more, they would have. Therefore, what the buyer pays is now what the home is worth. It is typically not such a steal that the new buyer can turn around and flip the property for more money.

The other problem with a “short” sale is that it can take a “long” time. There are countless hoops the seller must jump through before the lender will agree to the short sale. Most of those don’t begin until there is a contract on the property. So the buyer sits in limbo for months while the process drags its way through the bureaucratic system. A quick short sale might be 60 days. A more typical one four months plus. And it isn’t unusual to wait six months for a response from the bank – which might still be a rejection or a counter offer to the contract.

So while short sales may SEEM like a great idea, they are, in fact, a time consuming and frustrating experience that MAY have a good outcome for those patient enough to see it through.

You and/or your agent did a lot of research and you took your best guess as to where to list your home but you’ve had no showings and it’s been 3 weeks. It’s time to reduce. Any time your home sits with no showings or very few for the market, it’s time to reduce the price.

It means that the buyers looking in your price range are rejecting your home without even seeing it. Sometimes it’s because it compares poorly to other homes in that price range on paper or on the internet. Sometimes it’s because your home is “invisible” to the actual potential buyer because it’s price in a range they are not looking in.

The rule of thumb used to be to always price a home ending in a “9” price point. For example, $99,000 or $249,000. Just as in retail stores, prices ending in a “9” appear cheaper from a psychological standpoint. The internet has changed that to an extent.

The customer who wants a home that might include that home at $249,000 would miss it if they were searching for homes from $250,000 to $275,000. Had that seller been priced at $250,000 it would not only show up in the search but might very well be the least expensive home found. At $249,000 it’s missed entirely.

Now a seller must take into account that most buyers begin their search on the internet and will look in price ranges. If a price reduction won’t take the home into a new search category it’s probably useless. For example, reducing a price from $112,000 to $106,000 won’t capture new lookers, but dropping it from $106,000 to $100,000 probably will.

Even after a home is listed, a seller should think like a potential buyer and from time to time “surf the net” to see how the home stacks up an a variety of searches.

Bottom line? No showings, reduce the price. You can’t negotiate a contract till you get a buyer to write one.

Mistake No. 6 - “The agent is what counts.” The agent can’t be any better than the company he or she represents. Look for company support. Find out office hours - if no one is there to answer the phone your home is going to be difficult to show.

Mistake No. 7 - “All realtors passed the same test so they must know the same things.” The real estate profession is constantly changing. The best real estate professionals stay abreast of those changes by continuing their education beyond the required demands. Look for additional designations and how recently they were acquired.

Mistake No. 8 – “This agent will hold an open house every week.” Open houses can and do sell homes. But only a small fraction of the homes held open are sold as a direct result of the open house. Good agents know better than to pin all their hopes on an open house. They use their time and the seller’s time in more effective marketing methods.

Mistake No. 9 – “I want an agent who lives in my neighborhood.” An agent should be hired because he or she is the most qualified for the job. Knowledge of the market isn’t only acquired by living nearby. Convenience shouldn’t be the primary reason for choosing an agent.

Mistake No. 10 – “This agent sold more homes last year than anyone else.” That should only be the beginning. How many of their listings did not sell? How many were reduced over and over before they sold? How smoothly was the process handled? How accessible was the agent when there were questions or problems? Quantity is important, but only if all of the quality questions have been answered satisfactorily.

Selling a home should be like any other business transaction, but all too often sellers make emotional or impulsive decisions that cost them money and time. Choosing the right realtor to market a property and negotiate the sale is the most important step in the process.

Mistake No. 1 - “My friend sells real estate so I’ll list with him.” Friendship alone isn’t enough to establish a professional’s credentials. Use the same standards as when selecting an attorney or doctor. A true friend will understand and appreciate that this is a business decision and will offer their credentials and expect to compete for the listing.

Mistake No. 2 - “Your presentation sounds good - I’ll list right now.” Look at more than one presentation and consider the advantages and disadvantages of each. Making an impulsive decision when caught up in the moment will be difficult to correct later.

Mistake No. 3 - “You’re the only agent who agrees I should price my home this much.” The market will ultimately dictate the value of your home. A home that is priced too high will only make the competition look better. Beware of the agent who only tells you what you want to hear.

Mistake No. 4 - “I don’t need references. I’m a good judge of character.” Character isn’t enough. Ask for and then check up on references of recent customers. Find out from them how they felt about their experience with the agent. If the agent is new in the business get references from people who have dealt with him or her on a professional basis.

Mistake No. 5 - “I’m going to list with the agent who has the lowest commission.” You get what you pay for. Effective marketing takes time and money. In addition, an agent who can’t effectively negotiate his or her own fee won’t be able to negotiate the best price for your home.

It would be nice to live in a perfect world in which a contract was written on a home and everything proceeded according to plan, with no glitches on the way to closing. But you’d better be prepared because stuff happens.

Financing is a huge contingency, and many contracts are written with the contingency date on the financing bumping right on top of the closing date. That means that neither the buyer nor seller may know if the property is going to close until the last minute. A seller could end up paying a mover and then not moving or moving out unnecessarily. A buyer could plan on moving in on the last day of his lease only to have the closing delayed and nowhere to go.

Inspections can result in delays if the repairs required are not completed on time.

The best way to avoid surprises is to write the contract with those possibilities in mind and allow an adequate time for each step to be completed. ANYTHING in a contract can be negotiated so either the seller or buyer can counter any terms written they feel will allow the process to go more smoothly. The key is to write the terms into the contract in the beginning so that the contract doesn’t have to be amended later and run the risk of falling apart.

I was watching the news awhile ago and they had a feature story on saving money – money the “experts” don’t want you to know about. Of course, one of their targets was real estate commissions.

What the media folks don’t recognize is that real estate professionals work on a percentage. Every time the seller takes a price reduction, so does the agent, because their commission is based on the sales price. If the sales price continues to be lowered, then so is the commission.

That same media person would probably be reluctant to suggest that in these hard times you also shop for the cheapest doctor or that you try to negotiate the cost of a trial lawyer or go with the cheapest accountant.

At a time when selling a home is the toughest it’s been in years, most real estate professionals are working harder and spending more time and money on marketing than in the past and yet have not raised their commissions. Now is not the time to sacrifice quality.

Shop for a real estate professional based on the expertise and services provided, not on price.

That may sound rude but there is such a thing as “functional (or structural) obsolescence. That means that a home is dated in a way, compared to other homes, that cannot easily be changed.

Changing from carpet to tile floors, or repainting, can be easy changes to make and still compare favorably to other homes on the market. Updating kitchens or bathrooms can be much more expensive, but still doable. But changing the outside of the home or the roof line, is generally prohibitive in cost.

If yours is the only frame home and the other homes around you are brick, then that isn’t fixable. The only way to even the playing field is to lower the price of the frame home.

The “pitch” or angle on a roof is dictated as much by custom and style as building code. Older homes may have a different pitch than newer homes and again, the only way to compensate for a home that looks like it’s dated is by adjusting price.

The location of a home may become “obsolete” making the home less desirable if it fronts a road that is more heavily trafficked or under construction or now backs up to commercial property. Again, while it’s a difficult pill to swallow, the only answer is a price adjustment.

Then, at some point, a buyer will say, “who cares if the home has ______, it’s a great price.”