I met with several clients in 2008 who were looking to purchase a foreclosure or bank owned property.  Some for the investment purposes or for the purpose to use as a primary residence.  I thought I would give a brief description of few common types of foreclosure or pre-foreclosure properties.

Short sale: A home that is typically listed with a real estate agent.  The owner has to contact the lender and prove some sort of financial hardship and has to show that they have tried to sell the home to at least break even.  Each bank has specific guidelines for short sale approval.  Once the thumbs-up is given by the bank, the borrower can then list the home with a real estate agent for a price that is less than the mortgage owed on the property.  The offer will then go to the bank for approval.

Foreclosure/auction sale: A home that is typically sold the county courthouse steps via a trustee sale.  After several attempts to work with the home owner the bank will eventually sell the home at an auction for a starting bid starts at or sometimes less than the amount owed on the mortgage plus fees and defaulted payments.  Investors will purchase the property at the auction with cash on hand (cashier’s check).

REO: A home that is owned by the bank and typically listed with a real estate agent.  If a home does not sell at the auction the retains ownership and will list the property with real estate agent.  Once the home is listed offers will again be made to the bank for approval.  This type of property is now owned by the bank (i.e. REO – real estate owned).

According to Willamette Valley MLS there were 236 REO/bank owned properties sold in the Willamette Valley in 2008.  This number grew about 39% between 2007 and 2008, however, the number of properties sold as an REO was less in 2004.  To see the stats from WVMLS year end click on REOs in the Willamette Valley.

Foreclosure is a definite buzz word (one of many) for 2008.  Foreclosures are devastating for some and can create opportunities for others.  The default rate on mortgages that has caused so many problems for our financial and real estate markets affects more than just those involved in the industry.  Those who have reached the point where they can no longer afford their mortgage payment have obviously gone through a substantial financial burden.  Regardless of whether the driving factor was a life change, loss of job, or poor financial consulting, a foreclosure is a devastating experience.

We are fortunate live in the Willamette Valley where the foreclosure rate is significantly lower than the national average.  However, I understand that those facing foreclosure could care less about the “national average”.  With at least 7 years of bad credit history following a foreclosure, the best option is to find a solution prior to having your house sold at an auction.

My mission to help my clients build a strong financial foundation goes beyond real estate financing.  In the area of foreclosures, education is important.  Knowing what to do if you are facing foreclosure can help save your financial foundation.  Real estate investors play a key part in the assistance for those who are in foreclosure.  A great local resource in area of foreclosures is LMC Properties.

LMC Properties is a sister company of Landmark Mortgage.  Our goal with LMC Properties is to create real estate solutions for those in need.  We offer free guidance to those facing foreclosure and for those looking to invest in real estate.

If you are interested in learning more about LMC Properties visit www.foreclosuresinsalem.com.  You can also email lmcproperties@gmail.com.