Foreclosures and Short Sales on the East End of Long Island

December 18th, 2008 category: East End LI Foreclosures, Real Estate News

Thinking about buying a foreclosed property (REO) on the east end of Long Island?

Here’s some food for thought:

Bank owned properties have the potential to offer an amazing opportunity. A recent example is that of a home located in Cutchogue, New York. Originally listed in 2006 at $650k, and dropped to $520k, the home received an offer while in the foreclosure process for $505k in 2007.

The bank, the now defunct Fremont Investment decided, in it’s “wisdom”, to hold out, and attempt a break even vs. accepting a short sale situation, letting a well qualified buyer fall to the wayside.

The end result: in 2008, this same property sold for $398k.

While winterization was not accomplished, creating much in the way of repair for the new owners, the significant price drop, to the buyers, more than made up for the costs that will be incurred to get it operational.

If there is a “hidden agenda” with bank owned properties, this type of costly “as is” offering needs to be fully understood by any buyer of a bank owned property, whether it is located on the North fork,Hamptons, or anywhere else.

Buyers seeking REO’s need, also, to be fully prepared to act- “pre” qualification is no longer an accepted level of ability to Efforts go unrewarded buy. A conditional loan approval subject to an appraisal is advised- agents listing bank owned properties are not interested in offering deals to banks in which the buyer is ultimately unable, financially, to make a purchase.

There is a long list of paperwork required of a real estate agent and their buyer in order to make a purchase on a bank owned property: proof of funds, loan approval, and a long list of bank requirements including “as is” stipulations are among the differences between a “normal” sale, and a bank owned property.

While “short sales” (getting the bank to accept an amount less than the loan amount) are getting their day in the sun, the reality is that a large majority of these efforts fail, with properties ultimately going back to the bank.

Reasons are varied, but typically involve an anxious buyer being kept on the sidelines in a frustrating tug of war with the banks- paperwork submitted (and re-submitted, and RE submitted to a changing array of loss mitigation individuals, BURIED with requests) who end up giving up, and walking away. Months of effort go unrewarded for these buyers and sellers.

Understandable- short sales, while touted by some as a viable solution, offer NO GUARANTEES of a good outcome for either seller or buyer. A bandied about estimate of success is a rough one in ten.

While there is evidence that the banks are no longer seeking to hide their potential “assets” by delaying the transfer of a property into a bank owned liability, the process remains complicated.

No Guarantees As we find ourselves more involved with properties that have reached the “foreclosed” status, and into “bank owned”, there is an awareness that, on the east end of Long Island, many more properties are in a “lis pendens” position, offering a red flag that suggests that there is much more to come.

If you are seeking a distressed property on the east end of Long island, email us with your request, and we’ll provide a list of expectations that must be met by banks before an offer is considered.

Additionally, as we become aware of bank owned properties, we’re happy to share this knowledge.

This entry was posted on Thursday, December 18th, 2008 at 1:03 am and is filed under East End LI Foreclosures, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Foreclosures and Short Sales on the East End of Long Island”

myrtle beach jobs Says:
December 18th, 2008 at 3:18 pm
great article we are seeing short sales becoming a larger part of our local market
laurie mindnich Says:
December 18th, 2008 at 7:03 pm
Thank you, myrtle beach- they’re certainly part of the landscape, and as long as all parties have an understanding of the process, perhaps less disappointment will prevail, and more homes will close!