Short Sales and foreclosures are a part of our current real estate market. As a potential buyer or seller, it is vital to understand what they are and their impact on real estate in your area.
Short sales: Short sales are transactions in which a seller sells a home for less than owed on the property. Short sales are not bank owned properties, however a bank has to approve the sale prior to closing for a short sale to occur. Sellers may have to attempt to sell a home "short" for many reasons such as declining home values, poor lending practices, or unforeseen circumstances.
Foreclosures (or REO's): Foreclosures are bank owned properties. A foreclosure takes place after a home is surrendered to a financial institution after a long and lengthy legal process. Once this occurs the home than becomes a REO (Real Estate Owned) and is generally offered for sale to the public in the form of a sheriff sale or on the local MLS.
Effect on Home Values: Both of these types of properties have a negative impact on home values in an area. The simple reason for this is that they are competing with sellers for a limited number of buyers. The amount of impact varies but is usually dependant on how many of these properties are listed or have been sold in an area. If a builder practiced or pushed poor lending practices to a number of buyers in a neighborhood for example, there is usually a delayed but absolute effect on home values while the neighborhood struggles through an imminent foreclosure cycle. In these instances, home values plummet and everyone is affected.
The good news is that in many cases these distressed properties have little or no effect on their homes' value. Potential sellers can go to www.indyhomevalues.com to receive a free market analysis for their Indy Metro area home.
Buyers in the Indianapolis Metro area can go to www.newestindylistings.com and get all new foreclosure and short sale listing sent directly to their email. When you are on the site make sure you indicate you want short sale or foreclosure listings in the comments section!
Matt Borushko is an agent with Keller Williams Realty in Carmel Indiana. Matt can easily be reached through his website at www.mattsellsindy.com