I would by no means call my self an expert at foreclosures. I would say though that in my experiences right now with short sales they are by far more of a pain in the -ss then simply purchasing an reo property. The response time from the lenders are just to much to deal with. Additionally in SOME CASES the list price on the MLS for short sales does not really seem to correlate with the reality of what the lender will accept. I think that once the property does finally become an REO that there is much more motivation by the lender.
With regards to an REO note that any REO you purchase will pretty much be exempt from any and all disclosure. Lenders have never lived in or occupied the home so they have no knowledge of any existing problems. They will also have a pretty hefty release of liability for you to accept. There is nothing wrong or abnormal about this. It just merits that you do as thorough a job as possible performing your own diligence. Whil eyou do have the right to ask for a termite clearance and request any repairs you find during the due diligence period, it is best to assume the lender will not remedy any requests made.. they may credit you some money, they may not. It never hurts to ask right?
At any rate, the final question is how do you think the market will do in the future AND to be more specific in your target area? Do you think there will be further depreciation? Do you envision foreclosures in that target market? The answer is most likely yes in both cases. So hanging out and waiting a few more years may be the best strategy.
Again though, the main point is with the REO properties, just do a very thorough job with your due diligence and you can save alot of money.
Also do not confuse an REO or private auction with a trustee sale. The trustee sale is an auction of sorts where you can purchase properties but the vast majority of trustee sales end up with the property going back to the lender.
SD Realtor
