Grasping the Key

Surge In Foreclosures & What To Do About Them

By On September 16, 2011

Foreclosure Radar, a website that tracks foreclosure filings is reporting that Wells Fargo, Bank of America and US Bank increased their rate of foreclosure filings by double digits in California, Nevada, Oregon and Washington between July and August.  Foreclosure rates had been in decline over the few months previous to August.

In California, foreclosure starts jumped a wopping 70% from July to August.

 

Locally

Here in Santa Cruz, we have a sleepy winter sales season.  If these banks follow the typical four month time frame to foreclose that means these properties will begin hitting the market here in December and January when there are few buyers shopping for homes.  As a result there will be fierce competition among sellers and some great deals to be had- especially if interest rates continue to remain at rock bottom prices.

Tips for Buyers

If you wait until January to prepare to buy a property you will be too late.  Here’s what you should be working on now:

  1. Select an agent to help you find, negotiate, and lead you through the process of buying a home.
  2. Select a mortgage broker or bank to work with on the financing
  3. Get any documents the mortgage broker or bank needs and get a pre-approval letter.  Now you will know your maximum purchase price.
  4. Talk again with your agent and match up what you can afford with what you want. This should give you a clear picture of what you will be looking for, where it is located, and what you can expect to pay for it.  This will save days of your time.
  5. Come up with a game plan for identifying properties with your agent.  Do you like properties for sale emailed to you?  Want to shop yourself or let your agent handle it?
  6. Follow your plan.

It’s a long process and if you start after you think you’ve found the perfect property chances are you won’t get it because you won’t be prepared.  Also, in the rush you may end up with an agent you dislike or who is unqualified, or a loan that was not the best one for you.

 

Tips for Sellers

If you have been considering selling this rise in foreclosures starts may signal two things.  First, if you are not a distressed home owner you may want to get your home on the market now before the winter (and these distressed properties) hit the market.  Second, if you are a distressed home owner you may be next and you really should consider a short sale.  Loan professionals are telling us that short selling could save you up to five years of waiting to be able to get a home loan again versus being foreclosed on.  Given our current government’s anti-keynesian approach to getting us out of the recession we may be here for a very long time.  Chances are quite good you will be able to buy a home similar to yours as soon as two years from now and have a much smaller monthly payment than you do now.  In addition, the recent SB458 bill passed here in California eliminates the right of the lenders to pursue you for the deficiency in most cases.