It’s Spring (sort-of) in Montana, and the thoughts of making a move start flowing. Some Buyers are looking to invest in their first homes, others are looking to purchase a larger or smaller home, and others are looking at investment possibilities. There are many property listing types out there, but what does it all mean to you as a Buyer? How might a listing type affect your goals?
Traditional Listings:
This is the type of listing we are most familiar with. A home is listed on the Multiple Listing Service (“MLS”) for a specified price. A Buyer can make an offer on the property with regard to price, terms, closing date, etc. and it is mutually negotiated between Seller and Buyer. Closing could happen as quickly or as long as is negotiated, due to party restrictions and any financing restraints.
Short Sale Listings:
Short sale listings are listed at a price that, if sold for that price, would not pay off the mortgage on the property. In most short sale situations, the lender who holds the mortgage has not approved the listed price, and will not discuss what amount they will approve until there is an offer on the table. So, it is important to know that even if a short sale is listed at a certain price, and the Seller agrees to it in the Buy-Sell Agreement, it does not mean that the lender will approve a sale at that price.
Another important aspect to short sale listings is that most lenders will not consider contingent offers. By “contingent offers”, I am speaking of offers that include a contingency that must be released prior to closing (other than the typical home inspection, appraisal, insurance and financing contingencies). If a Buyer is looking to purchase a short sale, but must sell their current home in order to qualify for financing on the short sale, most lenders will not look at the offer. If the short sale is a local lender, there is a potential this could work. But, in general, a Buyer must have a very “clean” offer for a lender to consider it.
Foreclosures:
Foreclosure listings are generally listed at a price that the Seller (which is now the bank) is willing to sell the property for. As a Buyer, it is usually easier to purchase a foreclosure, as opposed to a short sale. The reason for this is that in a foreclosure you are only negotiating with one party (since the Seller and lender are now one in the same). In a short sale, you are negotiating with the Seller of the home, who is in turn negotiating with the lender for a reduced payoff on the loan.
In terms of making an offer on a foreclosure, it will completely depend on the lender (now the property owner). Different lenders have different requirements for a purchaser.
An important aspect to remember with foreclosures is that many have sat vacant for extended periods of time. It is so very important to get a thorough inspection of any property, but I can’t stress this enough for foreclosures. Lenders will not make any disclosures as to the condition of a property. You can search for foreclosed homes that are owned by HUD here, keeping in mind that this does not include all foreclosed homes in an area, and that most foreclosed homes in Missoula, MT are also listed on MLS.
Contingency Sales:
Listings that are shown as “contingent sale” on the MLS mean that an offer has been accepted, but that there are contingencies that still need to be released for the sale to go through. The contingency could be for a number of things, but most frequently is that the Buyers’ home must sell in order for them to purchase the listed home.
In a lot of cases, these are set up with a 72-hour contingency. What does that mean? Essentially, if another Buyer comes along and makes an offer on the home, the Seller has to give the first Buyer the “first right of refusal” by allowing them 72 hours to either (1) release their contingency and move forward with the sale; or (2) back away from the sale, thereby allowing the Seller to sell to the second Buyer. This does not mean that the first Buyer has to actually close on the purchase within 72 hours, it just means that they have to prove that they can remove the contingency and purchase the home without selling the other home. So, there could still be a potential to purchase a home that is listed as a “contingent sale”, depending upon the circumstances.
These are just a few of the common listings we are seeing in the Missoula real estate market lately. If you have any questions about others, or other questions about any of these types, please contact us!
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