Lately, I have been bombarded with questions about Short Sales and Foreclosures. Which makes sense, since these 2 types of Lender-Mediated Sales made up about 60% of the Twin Cities Closed Sales in January 2009.
That means 6 out of every 10 homes that sold in January ’09 were either a bank-owned or short sale. Needless to say: that’s a lot!
Historical figures are more like 2% of the closed sales for these types of properties.
So how does the Sheriff’s Sale come into play here?
Answer: When a home-owner defaults on their mortgage payments, they begin to get late payment notices and foreclosure proceeding letters. Depending on their lender, they may have several months or more to make up their late amounts due. If they can’t or choose not to, then the house will eventually get sold at the Sheriff’s Sale.
If no one bids a high enough price at the Sheriff’s Sale (which rarely happens nowadays) then the home owner has 6 months of Statutory Redemption Period on the State of Minnesota to pay all the remaining debts on the house and avoid full-blown foreclosure.
The reason I like to find out if the home has gone to the Sheriff’s Sale yet, is that after that point we know (as buyers) that we have 6 months or less to buy the home before the property goes back to the bank.
A lot of times homeowners will take all the appliances, light fixtures, and damage other parts of the home when they are finally evicted from the home in a foreclosure. This is why Short Sales are sometimes more desirable for buyers, since the homes are normally in better condition than bank-owned properties but almost as cheap.
If you are thinking about buying one of these short sale homes, then always try to find out if the sheriff’s sale has occurred.
