In this episode we are covering the different types of real estate transactions. As a buyer, you find out what your budget is, you look at a home, fall in love with it and want to buy it. Who are you presenting your offer to and how long will the transaction take? These are great questions! Tune in as we breakdown the different types of real estate transactions.
Every transaction has a buyer and a seller. The seller can be a person, a trust, a business, a bank, or the county.
What is a traditional sale?
A traditional sale is when a person(s) owns a property, they hire a real estate agent and sale it to another person who has hired a real estate agent as well. Basically, consumer to consumer. Buyer and seller negotiate directly with one another through their agents.
What is a foreclosure home?
A home in foreclosure is owned by a bank after the prior owner defaulted on their mortgage payments. The bank typically will sale the home in auction for cash or financed offers. The bank is trying to recoup their investment, so a cash offer is likely more attractive to them. When a home is foreclosed by the bank, it may be vacant or still occupied by the prior owners. Make sure to do your due diligence before putting an offer to find out if you will need to evict the prior owners when you take ownership.
Pre-foreclosure sales are slightly different, the bank has advised the owner that their loan is in default and the owner of the home has hired a real estate agent to list their property and all fees are paid through the transaction. Once the seller accepts an offer (cash or financed), the bank will approve the sale and the home doesn’t have to go into auction and an eviction won’t be needed because in most cases, the prior owner will or has already moved out.
What is the benefit of buying a home in foreclosure or pre-foreclosure?
You will usually get a great deal, the home will most likely be listed for less than it’s worth.
What is a short sale?
A short sale is when the owner of the home owns more than what the property is worth, and their monthly payments are behind. After hiring a real estate agent, the owner will need to get approval from the bank to sell the property for less than what is worth, and all the proceeds will go to the bank.
What about new construction? Who owns those properties?
The builder owns new construction homes. They buy the lots in bulk and build custom or semi-custom homes which are then sold to the public. Sometimes these homes will be finished, they are called quick move-ins and they take about a month to close. And other times you can be on a waitlist for the lot, and the build out will take about 6 to 9 months.
What is a probate sale?
A probate sale is typically when the owner passes away and there wasn’t a living trust in place, the family members of the deceased owner will hire a real estate agent to list the property and accept an offer, however a judge must ultimately approve the sale of the home to a specific buyer.
As usual, what is our advice? Consult with your lender and your realtor so you know your budget and are well informed and most importantly you know what to expect when you are buying a home.
See you next time!