I get more questions about properties marked Active Short Contingent than any other category on the website. When a property is in this status there is a contract between a buyer and seller to purchase the house but the contract has not yet been approved by the seller’s lender(s).

I have conflicting feelings about having these properties on the website. Sometimes there is a chance that the seller’s lender(s) want to keep seeing offers – the lender(s) want to make up as much of the shortage as possible. There also often can be weeks between the time an offer is submitted until the bank approves an offer so often buyers will back out. There are valid reasons the sellers want to keep marketing the property – and sometimes there are valid reasons to try and tour and even write offers on a home that already has offers submitted, but in some ways it feels to me like deceptive advertising. Right now there are so many homes in this status (because it can take weeks or months for a short sale to be approved) that it is hard not to run into one of these properties in many neighborhoods. I really would like to hear from people using the website if they find these listings helpful or annoying because I am really unsure if I want to keep them on my website. I’m happy to have this kind of feedback.

With all of the economic troubles the country has been facing, it should come as no surprise that some savvy investors have been taking advantage of some great real estate deals. As housing markets around the country have reached lows that haven’t been seen for years, many experts agree that there has never been a better time to purchase real estate. Luckily, you don’t have to be a millionaire or a real estate tycoon to take advantage of these great prices. In fact, if you are simply looking for a great home for you and your family, purchasing a foreclosure just might be the answer. By following these five simple steps, you may soon find yourself living in the home of your dreams at a price that fits your budget.

Step #1: Decide Where You Want to Buy

There are many great foreclosure properties out there to select from. If you don’t have your heart set on living in a certain area and you are simply looking for the best foreclosure markets in the country, you might want to consider one of these top foreclosure markets:

• Greeley, Colorado
• Detroit, Michigan
• Miami, Florida
• Indianapolis, Indiana
• Denver, Colorado

Of course, each of these markets is vastly different and the types of homes you can expect to find there will vary significantly. Therefore, you need to consider your current as well as your long term plans when deciding where you will buy.

Step #2: Obtain Financing

Getting your financing squared away before you start your property search is a good idea, as this will tell you exactly how much you can afford to buy. By being pre-approved for a loan, you will also be able to move quickly on the purchase. When it comes to purchasing a foreclosure property, having the money in your hand will significantly increase your chance of being able to purchase the property.

Step #3: Get an Agent

Although it is possible to purchase a foreclosure without the help of an agent, hiring a real estate agent will simplify the process. Not only will an agent be able to help you locate foreclosure properties, he or she will also be able to guide you through the legal process of completing your purchase.

Step #4: Contact the Owner

Contacting the owner of the property can be trickier than you might think, as the process changes according to the status of the property. If the property is in pre-foreclosure, for example, you contact the owner directly. If the property has been put to auction, on the other hand, you will have to place a bid on the property at the auction. In addition, you generally have to pay cash at the time of the purchase. Finally, if the lender or a government agency has taken possession of the property, you will need to contact that agency in order to discuss the possibility of making a purchase.

Step #5: Inspect the Home

It is essential for you to thoroughly research the property you are considering buying. Otherwise, you might be taking on a big problem without realizing it. In addition to checking into any financial liens that might have been placed on the property, you also need to get the property inspected in order to make sure it is still in good condition. Contrary to popular belief, foreclosures are often in excellent condition. Nonetheless, a thorough inspection is necessary in order to know what you are getting yourself into.

After successful completion of these five steps, you are now ready to make an offer. If everything has gone right, you can congratulate yourself on becoming the proud new owner of a great piece of real estate at a bargain price!

Jolenta Averill is the owner of Madison real estate brokerage Lake & City Homes Realty where she assists investors and first-time homebuyers alike in acquiring Madison Foreclosures For Sale and Madison Short Sale Properties. Call Jolenta at (563) BUY-SOLD today to discuss your unique requirements.

I often recommend that short sales be avoided when looking for a home.  One problem has been little standardization of the process.  Banks have had no consistency in dealing with sellers and short sale offers and even finding two listing agents who process offers in the same way has also been a challenge.

Two government programs are attempting to streamline this process – HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternative).  The primary objective of both of these programs is to help qualified homeowners avoid foreclosure and modify their loans when possible to keep current homeowners in their homes.  Get more information on both of these programs at the official government site:  MakingHomeAffodable.gov

Guidelines that went into place in early April is starting to put some structure into the short sale process.  Structure though does not mean simplicity as there are 45+ pages of documentation.  While now there are some specific time frames for lenders who chose to participate in this program, many of the details are still left up to each individual company in how to implement the program.  This means that there will still be no real consistency when working with short sales.  Bank of America does not have to have the same requirements as Wells Fargo or the local credit union down the street.

While there will be some structure in the new program, it is likely that some uncertainty will remain in terms of a resolution of offers.  Many buyers have voiced frustration in the amount of time that often passes before they have a resolution on their offer.  Until the processing time of short sale matches other distressed properties, most buyers will still be better off  avoiding short sales.

Next time – What should you look for when considering putting in an offer if your only choice is a short sale listing?