In a time where the media is flooded with talk about foreclosures, short sales, and the sub-prime mortgage crisis, you may be wondering how all this affects Estes Park.
First, there may be some confusion between the different types of distressed property.
What is a Distressed Property?
When a homeowner gets behind on their payments, they may be given notice by their lender that the lender intends to foreclose on the property. Foreclosure is the act taken by the bank to repossess a property used as the collateral against the mortgage granted to purchase the property. When the home owner is served the notice, they enter into the time period known as Pre-Foreclosure. The home owner usually looks into selling their property at this stage to pay off the mortgage against the property before foreclosure happens.
Unfortunately, in today’s economy, if a home owner is forced to sell, the market value is sometimes lower than when they purchased the home. If the home owner received a loan for 100% of the property at the time of purchase and has to sell, they may attempt a Short Sale. Short Sales are when the current market price will not pay off the mortgage on the property. Either the seller comes up with the difference, or negotiates with the bank how to deal with the difference between the sale price and what is owed.
If the home owner is not successful at paying off his debt or performing a short sale, the bank forecloses on the home. Through a series of events, the bank becomes the new owner of the home. This is what is referred to as Bank Owned Property or REO (Real Estate Owned) Property.
So, How does all this effect Estes Park?
Estes Park is seeing a relatively low volume of bank owned properties coming on the market. While this does seem counterintuitive, there are several reasons for small numbers of bank owned homes in Estes Park. First, the majority of home purchasers have traditionally used a significant amount of cash as a down payment which ultimately provides insurance against a short sale scenario. Secondly, Estes Park has a strong history of price appreciation or price stability in recent years which makes it easier for homeowners to sell their property at a higher number than what they purchased it for. Thirdly, there are a large number of investors and wealthy people in this community who are seeking out deals of this nature.
Because of these factors, there are actually LESS bank owned homes on the market currently than there has been in recent years. There are still a fair amount of troubled home owners, short sales, and foreclosures in the area, however, not many of them make it through all the steps before an investor of some kind jumps in and purchases the property before it is available to the general public through the Multiple Listing Service (MLS).
In conclusion, if you do find a bank owned property that comes on the market, be ready to act quickly. My new web site will soon have an additional feature of searching for bank owned homes. Until that happens, give me a call or email and I will personally be sure you are notified of any new bank owned homes that come on the market. Please keep in mind, though, there is plenty of competition out there looking for a real estate deal in Estes Park.
