I am often asked what is the difference between a short sale and a foreclosure. 

In a short sale, the owner still owns the property, but if they tried to sell they would have to bring money to the table because the property is currently worth less than the mortgage value.  This is money that the owner does not have so they are negotiating with the bank in order to get out of their home before going into foreclosure. 

One of the major problems with short sales is the fact that they take a lot of time.  This does not matter often when a client is looking for a condo as a vacation home because it does not matter how long it takes to get it sold.  On the other hand, if someone is moving to the island and needs to get in a property we normally don’t look at short sales.

In a foreclosure, the bank already owns the property and there is normally a faster turn around time. 

A lot of people feel that there are some excellent values available in short sales, but you must be willing to wait. 

Click here to check out our Hilton Head Island short sale and foreclosure properties. 

I was recently at a listing appointment; I was going over everything that had recently sold in that area, most of which were bank foreclosures.  After going over all of the comps, the seller leaned back in his chair and said how hard these sales were on “regular sellers.”  I have told several of my sellers that now is not the time to sell if you are a “regular seller.”

It is important to realize that the buyers are in charge of the market at this time. 

It reminds me of the time that Jane and I were driving back to Hilton Head from Jacksonville and Jane wanted to stop at Krystal.  I decided to go get some gas while she was getting the food.  There were two gas stations right across the street from each other  - one advertising gas for $2.39/gallon and the other advertising $2.99/gallon.  The gas station with the less expensive gas was getting all of the business and it was easy to understand why. 

It is the same way with the real estate market; nobody is going to pay $400,000 for a house when there is a bank foreclosure that is almost identical down the street priced at $349,000. 

Sure, the bank foreclosure might need new carpet and some fresh paint, but that is just a small expense in the long run.  Hopefully one day we will get back to the days where there are more “regular sellers” and not so many foreclosures.

I showed property to someone and we found a great bank foreclosure; it was under priced and it was in a great location.  When I talked to the husband the next day, he said that his wife really did not like the floor plan – he said, “momma ain’t gonna buy it just because it is a good deal.”

I guess this really shows that it does not matter what a good deal a property is; if you do not like it, you are not going to buy it.  I always try to point out to people that the need to like what they buy because they are going to have to live in it.

There have been some new discussion with mortgages and regimes.

There is a law that says that  if a certain number of people are behind in their regime payments within a certain condo complex, lenders are not allowed to lend in these developments.  This is really making it hard to sell some condos because they need cash buyers.

I was talking to a fellow Realtor in Chicago and she was telling me about this particular issue that was complicating one of her sales; financing would not go through on a purchase because there were too many people behind on their regime payments. 

She ended up going to the complex and found out that there were only two people too many behind on their payments; she paid their fines to bring them up to date which allowed the financing and the sale to go through. 

I’m hoping that we will not see this problem in Hilton Head, but this is already a problem in one particular complex.  This has been driven by many people going into foreclosure; when they can’t pay their mortgage they often stop paying regime fees and insurance. 

I’ll keep you posted on this – it is something that is new and we don’t know all the details, but it is definitely concerning to all of us.

If you read my blog yesterday, you know that we were talking about the states with the highest percentage of mortgages with negative equity. 

The following are the states with the lowest percentage of mortgages with negative equity; Oklahoma with 6.1%, New York with 6.2%, Montana with 7.4%, Alabama with 7.4% and North Dakota with 8.6%.  There were several states that did not report including Louisiana, South Dakota, Maine and West Virginia. 

If you will notice, the states with the highest percentage of mortgages with negative equity are ones where massive building occurred and most of the mortgages were obtained between 2003 and 2007.

For the real estate market to turn around we are going to have to see the number of foreclosures reduced.  With high numbers of foreclosures, it makes it very hard for regular sellers to compete in the real estate market. 

For purchasers, there are some great opportunities available.  Visit my website to view a list of short sale and foreclosure properties available for sale.

I received several phone calls from clients this morning asking if I had seen 60 Minutes last night.  Unfortunately I missed it, but I have actually been doing some research myself looking at the percentage of mortgages that have negative equity – meaning that the owners owe more than the property is worth.  There are five states that are in really bad shape with very high percentages of mortgages that have negative equity; Nevada with 65%, Arizona with 47.9%, Florida with 44.7%, Michigan with 37.3% and California with 34.7%. 

I find this absolutely unbelievable – this means that in Nevada that 2 out of every 3 people with a mortgage have negative equity.  These statistics have a detrimental effect on the real estate market.  I feel that it important to realize that one of the first things that needs to be fixed is the real estate market as it has an effect on many other factors in this economy.

If you look at these numbers you will realize that we have not solved the foreclosure problem in the United States and it could definitely get worse before it gets better.  For purchasers, there are some great opportunities available. 

Stay tuned – tomorrow I will give you the states with the states with the lowest percentage of mortgages with negative equity.

At the Beaufort County bank foreclosure sale on Monday there were approximately 150 properties that were foreclosed on – some in Beaufort, some in Bluffton and some on Hilton Head Island. 

We went through a 15-year time period where we had no foreclosures on Hilton Head.  There is an old saying that says “a rising tide lifts all boats” and when people’s property values are going up 10%-25% per year there are not going to be any foreclosures because they can sell the property at any time they want. 

When the reverse of that happens, people who purchased in 2004, 2005 and 2006 are left in trouble and due to financial difficulties, some lose their home to foreclosure.

In a slow real estate market, buyers are always looking for the best deals out there and they are often interested in foreclosures.  This would have a negative effect on someone who is not a foreclosure because you have to deal with these properties. 

Many times people think that foreclosures don’t have any effect on their property value.  Buyers don’t look at it that way.  A buyer is looking for the best deal available – whether it is a foreclosure or not.  It is important to realize that any and every seller has to compete with foreclosures.

There are some great deals out there.  If you as a buyer, are interested in getting a list of the foreclosures please let me know.  We can set you up so that you will be notified of new foreclosures – it is fast, easy and harmless. 

Click here to view my Hilton Head and Bluffton foreclosure properties.

What are your goals for 2010?  If you don’t own a piece of property in paradise – you should.  If you want to upgrade to a nicer piece of property, better location or a larger home – you should do so now.

I have named 2010 “the year of the buyer”.

Why?  It is such a great year to buy real estate on Hilton Head.  There are so many good properties out there at unbelievable prices.  I feel like a kid in a candy store. 

I encourage all my clients to analyze their situations – buy now and be happy later.

People always ask me what a bank will take on a foreclosure.  Unfortunately I do not know because every bank is different.  One of the agents in my office ran some numbers yesterday and he shared these numbers with me.

We have had 16 homes sell on Hilton Head Island that were foreclosure homes.  These homes sold for 94.9% of list price and were on the market for an average of 66 days. 

He ran the same statistics for the year.  During 2009, we had 50 homes on Hilton Head Island that were foreclosure homes.  These homes sold for 95.6% of list price and were on the market for an average of 69 days. 

Several of the homes actually sold for more than they were listed for because banks usually put such an attractive list price on them that sometimes people will get in a bidding battle.

Are foreclosures the best buys?  A lot of times they are.  It depends on the price, the motivation of the bank and how long they have held the property.

Click here to view Hilton Head Island foreclosures or click here to learn all the steps in how to buy a foreclosure on Hilton Head Island.