A short sale is one where the sales price was insufficient to pay the total of all liens and costs of sale; and where the seller did not bring sufficient liquid assets to the closing to cure all deficiencies.  In other words, the seller had to sell at a price where they needed to bring money to closing, but they couldn't. 

A short sale almost always results in an incomplete payoff of one or more mortgage debts, so a lender has to agree to a short sale.  Lenders are apt (in the current market) to consider a short sale because they are likely to recoup more of the money owed to them than if they are forced to foreclose on the property.

I am listing a property this week that will almost certainly be a short sale, and I was surprised to learn from the owner that the bank had encouraged the short sale and was quite willing to go along with a short sale.  This was somewhat of a surprise to me because over the last years I have heard countless stories of lenders who are hesitant to consider a short sale, and instead pursued foreclosure. 

If you are considering buying a property that will be a short sale, it will likely take a little bit longer for the transaction to take place, as the bank must approve of the deal that is worked out between buyer and seller --- but a short sale can be a great opportunity to buy at a good value.

Over the past nine months I have posted quite a few foreclosures opportunities on this blog, HarrisonburgHousingToday.com.  Yet during this time I have realized that not all of my blog readers are interested in hearing about houses that are coming up for foreclosure.  Thus, I have created HarrisonburgForeclosures.com. 



On HarrisonburgForeclosures.com you will find information and news about the foreclosure process, as well as updated information on properties that will be foreclosed upon in the near future.  I will not be posting all foreclosure properties, but rather those where a reasonable opportunity exists for purchasing at a savings.

If you are interested in knowing about foreclosures in the Harrisonburg area, you can subscribe to HarrisonburgForeclosures.com here.

The property pictured to the right (506 Virginia Avenue) was purchased 18 months ago (January 2007) for $185,000.  The first mortgage, with an original loan amount of $148,000 is scheduled to be foreclosed upon on Wednesday, July 30, 2008 at 11:00 a.m.

The house was built in 1907, and offers 2,514 finished square feet, 3 bedrooms, and 1 full bathroom.  The property is currently assessed at $200,700 --- thus (potentially) offering a $52,700 equity opportunity.

Do you have questions about this foreclosure sale, or about the foreclosure process in general?  Feel free to ask (scott@cbfunkhouser.com, 540-578-0102).  Or review the notice in the Daily News Record.

2991 Taylor Spring Lane is a three-level townhome in Taylor Spring subdivision with three bedrooms, two full bathrooms, and a half bathroom.  In addition to the 1400 finished square feet above ground, the home has a 700 square foot unfinished basement.  Oh --- and as is evident from the photo on the right, this is an end unit with a brick facade!

The property was originally purchased in March 2004 for $126,540.  The deed of trust that may be foreclosed upon is dated August 30, 2004 and is in the amount of $135,000.  Thus --- even if the principal balance had not been reduced at all by regular monthly payments --- a $62,900 opportunity may exist.  This equity gap is based on the current assessed value of $197,900 and the original principal balance of $135,000.

If you're interested, the trustee sale will take place on July 15, 2008 at 4:30 p.m. at the Rockingham County Circuit Court. 

A few other articles that might be helpful for understanding the foreclosure process include:

• Buying a foreclosure sale before the sale
• Types of foreclosure opportunities
• How and why to buy property at a foreclosure sale

And if you'd like to see other comparable Taylor Spring properties currently on the market, click here.

The townhome located at 2979 Diamond Spring Lane (pictured to the right) may soon be sold at a trustee sale.  The property was originally purchased for $200,345 on July 31, 2006.  The mortgage that may be foreclosed on had an original principal amount of $160,000. 

This townhome (circa 2006) features three bedrooms, two full baths, a half bath, and over 1500 finished square feet.  The current assessed value of the property is $189,300 --- thus, compared to the original principal amount of the deed of trust, an opportunity exists for at least $29,300 of equity.

Click here to view other townhomes currently for sale in Taylor Spring.

The trustee sale is scheduled for July 16, 2008 at 3:30 p.m. at the Rockingham County Circuit Court.  A deposit of $15,000 (cash or certified check) will be required at the time of the sale.

To learn more about foreclosures, you might consider reading these articles:

• Buying a foreclosure sale before the sale
• Types of foreclosure opportunities
• How and why to buy property at a foreclosure sale

A credit line deed of trust with a maximum amount of $1,600,000 is being foreclosed on.  The trustee sale will take place on July 9th at 2:00 p.m. on site (5639 Thomas Spring Road, Bridgewater, VA). 

The site looks pretty interesting --- a river runs through it!

The current assessed value $413,980. 



A bidder's deposit of up to $25,000 in cash or certified funds may be required.

Trustee:  Doug Stark, 540-512-1800
Source:  Daily News Record, June 23, 2008

Click here to view a similar property.

Property Characteristics
Finished SF	1,428
Circa	2006
Bedrooms	3
Bathrooms	2.5
Lot Size	0.053 acres
Pricing
Assessment	$189,300
Original Amount of Deed of Trust	$160,000  (7/2006)
Equity Opportunity	$29,300
Trustee Sale Details
Date/Time	June 11, 2008 at 5:00 PM
Location	Rockingham County Courthouse
Deposit	$15,000

Source:  Daily News Record, June 5, 2008
Trustee:  Samuel I. White, 757-457-1460

Property Characteristics
Finished SF	1,120
Circa	2006
Bedrooms	3
Bathrooms	2.5
Lot Size	0.051 acres
Pricing
Assessment	$138,300
Original Amount of Deed of Trust	$116,000  (12/2006)
Equity Opportunity	$22,300
Trustee Sale Details
Date/Time	June 24, 2008 at 5:00 PM
Location	Rockingham County Courthouse
Deposit	10%

Source:  Daily News Record, June 5, 2008
Trustee:  Bierman, Geesing & Ward, 301-961-6555, www.bgwsales.com

Can it be done? YES! Is it easy and fun? NO!

Properties in Harrisonburg and Rockingham County that are being foreclosed on are almost always advertised in the Daily News Record as an upcoming "Trustee Sale." When I see good opportunities in these notices, I post the trustee sale details on my blog.

Oftentimes, information about these foreclosure sales is available several weeks before the actual sale, and thus interested buyers sometimes wonder if it is possible to short circuit the foreclosure proceedings, and buy the property before the sale. The simple answer --- yes, this is possible. However, there are typically a few obstacles:

Owners in denial --- or seclusion --- or anger!

Being in situation where you can't pay your mortgage any longer, and the bank is foreclosing on your home is not AT ALL a fun situation to be in. I don't at all intend to make light of the unfortunate light that some homeowners find themselves in. And thus, if you are hoping to purchased a foreclosure property prior to the trustee sale, it is important to consider the perspective of the homeowner.

Many such homeowners are in denial --- thinking or hoping that they will catch up on their mortgage payments such that the sale will not take place. Others will be very difficult to reach, and it won't be possible to discuss a way to help them sell their home without being foreclosed upon. And some homeowners will be downright angry if someone contacts them about their home, and it's status as a pre-foreclosure property.

The lender can't sell you the home before the trustee sale, so if you are to attempt to purchase it beforehand, you'll have to deal with the homeowner. Be careful how you broach the subject, and be sensitive to a time of difficult life circumstances!

The timing will be tight!

While there are often several weeks between the first notice of a foreclosure and the actual foreclosure sale, if you are financing the purchase, you will need every last day of it if you hope to purchase the property before the sale takes place. If you are purchasing the property with cash, or if you already have your financing lined up, you may not have as much of a time crunch.

Sometimes the lender will postpone the foreclosure sale if they can be assured of a pending successful sale of the property that would pay off their loan. If they have doubts as to the buyer's performance, or doubts as to whether the purchase price will pay off the remaining balance of the loan, they may foreclose as planned.

If you are going to attempt to buy a foreclosure property before the sale, be sure to have all of your financing details arranged ahead of time!

Those second lenders don't like being in second place!

Finally, it is important to recognize that there is sometimes a second mortgage or line of credit on the property being foreclosed upon. If a primary loan of $180,000 is being foreclosed on, it won't necessarily work for you to swoop in and offer the owner $181,000 because you know this will pay off their first mortgage and because you know the property is worth $200,000. If a second mortgage (of perhaps $10,000) is in place, the owner won't be able to sell the property to you unless they have other funds in place with which to satisfy the second loan.

The potential existence of second mortgages doesn't mean you shouldn't pursue a foreclosure property prior to the sale, but it does mean that it will be worthwhile to do some preliminary research before making a proposal to the homeowner.

It can be beneficial for multiple parties to purchase a home before it is foreclosed upon. You, the buyer, can get a good deal on the house. The seller can avoid a foreclosure scar on their credit history. The lender can avoid the hassle and cost of foreclosing on a property. But if you are going to attempt this feat of real estate acrobatics, be sure to review the factors above and consider how to adjust your proposal to make the scenario work best for all involved parties.

Some additional light reading on foreclosures:
- Types of Foreclosure Opportunities
- How & Why To Buy Property At A Foreclosure Sale

Property Characteristics
Finished SF	988
Circa	1963
Bedrooms	3
Bathrooms	1
Lot Size	0.207 acres
Pricing
Assessment	$134,200 (2008)
Original Amount of Deed of Trust	$30,000 (7/2004)
Equity Opportunity	$104,200
Trustee Sale Details
Date/Time	May 28, 2008 at 4:00 PM
Location	Rockingham County Courthouse
Deposit	Lower of $3,000 or 10%

Source:  Daily News Record, May 14, 2008
Trustee:  Shapiro & Burson, LLP, 757-687-8822

Property Characteristics
Finished SF	2,316
Circa	1982
Bedrooms	4
Bathrooms	3
Lot Size	0.207 acres
Pricing
Assessment	$223,200 (2008)
Original Amount of Deed of Trust	$192,000 (8/2005)
Equity Opportunity	$31,200
Trustee Sale Details
Date/Time	May 22, 2008 at 11:30 AM
Location	Rockingham County Courthouse
Deposit	Lower of $15,000 or 10%

Source:  Daily News Record, May 7, 2008
Trustee:  Shapiro & Burson, LLP, 757-687-8822

Property Characteristics
Finished SF	1,767
Circa	1982
Bedrooms	3
Bathrooms	2
Lot Size	0.261 acres
Pricing
Assessment	$209,900 (2008)
Original Amount of Deed of Trust	$174,000 (4/2006)
Equity Opportunity	$35,900
Trustee Sale Details
Date/Time	May 21, 2008 at 4:00 PM
Location	Rockingham County Courthouse
Deposit	Lower of $15,000 or 10%

Source:  Daily News Record, May 6, 2008
Trustee:  Samuel I White P.C., 757-457-1460

Property Characteristics
Finished SF	1,292
Circa	1993
Bedrooms	2
Bathrooms	1.5
Lot Size	0.046 acres
Pricing
Assessment	$104,500
Original Amount of Deed of Trust	$65,000 (7/2004)
Estimated Current Balance	$62,000 (6.5%)
Equity Opportunity	$42,500
Trustee Sale Details
Date/Time	May 22, 2008 at 11:30 AM
Location	Rockingham County Courthouse
Deposit	Lower of $6,500 or 10%

Source:  Daily News Record, May 1, 2008
Trustee:  Shapiro & Burson, LLP,  757-687-8777

Property Characteristics
Finished SF	1,626
Circa	2006
Bedrooms	3
Bathrooms	2
Lot Size	0.278 acres
Pricing
Assessment	$252,400 (2008)
Original Amount of Deed of Trust	$173,245.50 (10/2005)
Equity Opportunity	$79,154.50
Trustee Sale Details
Date/Time	May 22, 2008 at 8:00 AM
Location	Rockingham County Courthouse
Deposit	10%

Source:  Daily News Record, May 1, 2008
Trustee:  Bierman, Geesing & Ward, LLC, 301-961-6555, http://www.bgwsales.com/

For some time now, I have been posting the details of foreclosures on my blog. I began to post all Harrisonburg and Rockingham County foreclosures because I have had clients interested in buying foreclosed properties. I'm making a change starting today, that I believe will still well serve my clients, and those interested in foreclosure properties.

First, let me explain that I categorize foreclosures into three areas:

• Terrible Opportunities - where the original amount borrowed (or my estimate of its current balance) is at or above the assessed value. Here is one example, where the original loan was for $231k, and the current assessed value is $157k.
  
• Good Opportunities - where the original amount borrowed (or my estimate of its current balance) is close to, but below, assessed value. Here is one example, where the original loan was for $270k, and the current assessed value is $316k.
  
• Great Opportunities - where the original amount borrowed (or my estimate of its current balance) is well below the assessed value.  Here is one example, where the original loan was $87k, and the current assessed value is $196k.

A few observations about the people who may be interested in foreclosure properties:

• Investors who hope to flip foreclosure homes (buy, fix, sell for profit) would likely be interested in the "great opportunities."
• Buyers looking for a home for themselves would likely be interested in the "good opportunities," and certainly the "great opportunities" as well.
• I have yet to meet someone who is interested in the "terrible opportunities," mainly because they aren't likely to be able to buy them at a reasonable price -- the bank will take the houses.

Unfortunately, for those who hope to do well buying a foreclosed home, most foreclosures in this area fall into the "terrible opportunities" category.  For example, yesterday a home on Chestnut Oak Lane was in the Daily News Record with an original loan amount of $343,920 --- and an assessed value of $316,700.

As I move forward, I will only be posting the foreclosure properties that I would categorize as a "good" or "great" opportunity.

Property Characteristics
Finished SF	1,404
Circa	1945
Bedrooms	2
Bathrooms	1
Lot Size	0.172 acres
Pricing
Assessment	$181,700  (2008)
Original Amount of Deed of Trust	$105,000 (7/2006)
Equity Opportunity	$76,700
Trustee Sale Details
Date/Time	April 23, 2008 at 12:00 PM
Location	Rockingham County Courthouse
Deposit	10%

Source: Daily News Record, April 7, 2008
Trustee: Bierman, Geesing & Ward, LLC, 301-961-6555