This is something that has become a huge part of Bakersfield's real estate market. Unless you live in a cave you have probably read some statistic somewhere or talked to someone who "knows everything" about foreclosures in Bakersfield. I'd like to clarify a few things and point out a few of the pro's and con's when looking into purchasing a foreclosure. The first and most important thing is to clarify the difference between an actual bank owned (commonly called REO or real estate owned) home and a seller who still owns their home and is trying to sell it for less than what they owe to prevent a foreclosure (commonly called a short sale).

 SHORT SALES- A short sale happens when someone would like to sale their home but they owe more to the bank than what it is worth on the open market and they do not have the money to pay the difference to the bank. Most of the time they can no longer afford their monthly mortgage payment and they need a way out. Most bank's require the seller to already be in default of their monthly payment and to have some sort of hardship that has caused them to no longer be able to afford their home.

 Once these homes enter the market a lot of times they are priced very low to attract buyers as quickly as possible due to the fact that a foreclosure is in the near future. However once an offer is received it still must be approved by the bank no matter what the offer is. Sometimes this approval process can take in excess of several weeks. There is also no guarantee the bank will accept any offer at all short of the full amount owed.

 If you are looking to buy a home and are not in any hurry these can sometimes turn out to be good deals. It is important to ensure that both your REALTOR and the sellers are familiar with short sales and will be able to negotiate with the bank on the buyer and sellers behalf.

 REO (Bank Owned)- These are the actual true foreclosures. They are homes that the bank has foreclosed on and now owns. Once the bank owns the property they may try to sell it at auction and if it does not sell it comes on the market through the banks REALTOR. What makes these such a great deal is that the bank cannot and will not continue to own the property. They MUST sell! They will set their price based off of several REALTORS recommendations and continue to lower the price until it sells.

 A few things to consider with these properties are that most of the time the bank is selling them "as is" and do not want to make any repairs on top of what they have done to get the home ready to be on the market. This can mean that you will need to be prepared to get a home inspection and make any repairs that need to be done yourself after escrow closes. Most foreclosures need a little TLC if for no other reason than they have been vacant for a while.

 The bank is also going to want a 30 day escrow and is going to be very strict on time-frames and earnest money deposits. Your REALTOR and lender must be very diligent to ensure you meet all of the time-frames during escrow to ensure you don't lose your deposit. The bank will also often have a penalty of $100 or more a day for every day late the escrow closing is even if it is something out of your control, ie... your loan program changed, the appraiser took too long to get the appraisal to the lender, etc....

 Both of these examples can be a chance to get a nice home and one that is sometimes well under market value. It is important though that you understand the difference and what kind of home you are attempting to purchase before you put an offer together. There are many parts to both of these that are not explained here. My goal was to give a brief explanation of these two very different types of transactions. If you would like to discuss foreclosures in more detail, please do not hesitate to contact us and we can provide you with more in depth information based upon your particular needs.

 Have a great day and come back soon!