Understanding Foreclosure in Denver Real Estate

Foreclosure is not a word that any of us wishes to even hear, let alone think about the development happening to us. In Denver real estate foreclosure is the legal proceeding where a borrower of the property has stopped making payments to the lender and the property is taken back by the lender. The point of foreclosure is the bank now has a chance to take ownership or sell the property and recover some if not all of the losses incurred by lending to a non paying borrower. The foreclosure process differs from state to state. In Denver real estate, foreclosure homes are properties that have been taken back by the bank and are now for sale by the bank. Throughout the foreclosure process there are many ways the bank can off-loan a property.

There are short sales. These are homes that are still “owned” by the borrower though the borrower has stopped making payments to the bank. The bank has agreed to help the borrower sell the property before in goes into foreclosure. In most cases this will save the bank money. Through the long process of taking a property into foreclosure the bank spends a lot of money. Once the home sells a few things might happen; the borrower is let off the hook for losses selling the home, or the bank forces the borrower to incur some or all of the losses. A lot of people believe that getting rid of a home through short sale is better on their credit than a full foreclosure, I would have to disagree. In my opinion money lenders see a short sale on your credit and automatically view it as a foreclosure.

Denver real estate auctions take place every week. Under the right circumstances a house hunter can buy properties pennies on the dollar. You see the late night infomercials claiming that you can purchase a home for a couple thousand dollars, well; I’m guessing that particular home is probably worth….a couple thousand dollars. I’ve never seen these types of deals in Denver real estate but that doesn’t mean they don’t exist. They are most likely properties that never hit the MLS. Call your city and find out when these auctions take place. It’s a great starting point for investors.

Foreclosures / bank owned properties increased from a year earlier in all but 10 states. Being an agent in the Denver real estate market I am astonished how many bank properties are currently on the market. In years past I would show maybe 1 or 2 of these for every 10 homes shown. Now I can count on showing 6-7 for every ten showings. It’s quite ridiculous. And from what I hear there are plenty more coming down the pike.

The real problems for agents in the Denver real estate market are the short sales. Let me rephrase that, the real problems for agents in the Denver real estate market are the shorts sales that have not been pre-negotiated. A listing agent lists a short sale home and doesn’t even know the bottom dollar price the bank will accept. They wait until they have a tried and true offer in hand and then submit it to the bank. This is the first time the bank has put any thought into what they really want out of selling the property and in more cases than not it takes them months and months to make a simple decision. By that time, dozens of other houses that fit the buyer’s needs come and go so when the bank finally gets back to them the answer is that the bank wants thousands of dollars more than what the listing agent had it listed for in the beginning.

In conclusion, as a Realtor in the Denver real estate market, if the home is yet to go into foreclosure and property is being listed as a short sale but has not been pre-negotiated with the bank I say let it go into foreclosure! It’s easier and less stressful on the buyer…..let alone the Realtor.