Foreclosures - A Growing Opportunity
Good Afternoon,
There is a dramatic change taking place in the Central Arizona real estate market with respect to foreclosures. Total sales of bank owned properties (aka REO’s) as reported each month represent the culmination of an oftentimes lengthy process, one that each of these homes has gone through.
First, the homeowner finds themselves unable to make the current mortgage payment. Some of these owners find a solution and are able to catch up and become current again.
Second, once the homeowner is anywhere from 3 to 6 months (sometimes more) behind, a foreclosure notice is filed setting a sale or auction date. During this period some homes are redeemed (brought current) and some are sold through a short sale process where the lender agrees to accept less than the balance owed providing the homeowner receives no proceeds at closing.
Third, the home is sold at auction. Sometimes an investor bids on the property, but most often in the current market, the only bidder is the bank who holds the mortgage. Once the bank owns the property it must go through an evaluation process, remaining occupants must be dealt with and then the property is listed with a real estate agent. Finally the real estate agent markets the property until a buyer is found and the property closes.
One can see in the following chart that the monthly closings represent only those homes which have completed all these steps. They do not reflect all the homeowners and mortgages in distress.
