Q: You hear about stories of people living in their homes for 1-2 years after they stop making payments on the mortgage. How do they do that and why do the banks let them get away with it?

Q: You hear about stories of people living in their homes for 1-2 years after they stop making payments on the mortgage. How do they do that and why do the banks let them get away with it?

A: When a house goes to foreclosure sale, the buyer is usually the bank or investor that the former homeowner stopped making payments to.

Banks do not want to own houses, especially vacant ones. Bank-owned properties (REO means Real Estate Owned) often do not bring as high a price when they are listed for sale as an owner-occupied house might bring.

While the bank owns the property they incur costs: legal and maintenance fees as well as a variety of other costs. Plus, the more REO properties there are in a community, the more they drive down resale prices.

In order to protect market value and protect the individual houses, the banks seem to be thinking it makes good economic sense to have the borrower, who is technically in default, still living in the house. Chances are they will cut the grass, prevent that kind of vandalism that might strike a vacant house and in other ways help maintain the market and house values.

=======================

Q: What are the best “deals” in local real estate today?

A: We have all heard beauty is in the eye of the beholder. Well, so is the best deal in real estate.

For a building contractor with construction skills, time and a line of credit at the hardware and lumber stores, the best deal may be the lowest price regardless of condition. He or she can fix it up and have a livable house.

For the young couple who are pregnant and first-time homebuyers, the best deal for them may be what is often referred to as “turn-key” livable — ready to move in and live there the day of closing so they can be settled when the baby arrives.

The person living in an apartment on a month-to-month lease may have lots of time to look, wait and wade through the homebuying process. For them, the often below-market value price of a short sale may be just the deal they are craving. A short sale can often take 60 to 120 days to close after a purchase contract is written. Typical closing takes place in 30-45 days.

So, the best deal is in the eye of the buyer and no two homes or no two buyer's matchup price, condition and time quite the same way.

If you are a homebuyer, which of these or which other set of circumstances and conditions add up to best deal for you?

AUTHOR'S NOTE

Thanks for reading my bi-weekly column in the Free Press. Plans are for me to respond to reader questions about local real estate and mortgage loan issues. When necessary I will ask other professionals to share their expertise and resources; for which they will be cited so you know who to ask for additional information or who to credit as local experts. There are few exact and many “right” answers in real estate. I will do my best to research and provide credible responses to your questions.

Email your real estate-related questions to douglasvanetten@gmail.com, or call 970-433-4312.

------------------

Doug Van Etten is an associate broker at Keller Williams Colorado West Realty. He has been helping families buy and sell their homes since the early 1990s.