Home Buying: Evaluating Home Search Options
There are so many places on the internet that purport to offer valuable information on residential real estate listings that the dizzying array of choices can be overwhelming. How can you be assured that the source is reliable and the information you are getting is accurate and up-to-date?
The intent of this page is to help cut through some of the confusion by evaluating the following sources of listing information for homebuyers:
SOURCES OF LISTING INFORMATION
According to recent statistics, about 80% of homebuyers begin their search online. This makes perfect sense given the ability to view pictures, virtual tours and detailed property descriptions without having to spend hours driving around? But, given all the options, it may be helpful to review the categories of how "For Sale" homes are organized:
A) Multiple List Service (MLS) Homes
The MLS is a database of homes for sale that are advertised through participating professional brokerage companies. Sellers of MLS-listed homes utilize the services of market professionals and generally pay the commission for both the 'listing agent' (representing the seller) and any 'selling agent' (representing the buyer).
Many real estate websites (operated by brokers and their agents) offer access to MLS-listed properties, but not all do so with the same level of quality. For example, although it may not be immediately evident, some websites only update the listings from the MLS database every few days, perhaps only once a week, or even longer. And, most real estate agents provide this information through third-party vendors.
Unlike the vast majority of real estate websites claiming to provide MLS data to the public, this www.MarylandHomesAndProperty.com website offers information about active MLS-listed homes for sale via a direct feed from the local MLS provider, Metropolitan Regional Information Services, Inc. (MRIS). The listing data information is updated daily and stored on in-house servers, so you can be assured of getting the most accurate information available.
It should be noted MRIS has regulations similar to other MLS operators that certain information from the MLS can only be accessed by license real estate professionals and thus cannot be displayed to the general public on this or any other website. This site is in full compliance with these contracted regulations, but I have made available as much of the most pertinent information as is feasible for homebuyers related to homes for sale in the MRIS-operated MLS.
Click Here to Search for Homes in the Maryland MLS
B) For Sale by Owner (FSBO) Homes
Homes that are being sold directly by the owner of the property without the assistance of a real estate professional are commonly referred to as FSBOs (pronounced 'fizbos'). These homes are advertised through whatever means the homeowner chooses to utilize, including a variety of online listing resource for these sellers.
The predominant and perhaps only reason why a homeowner might choose to sell their house without representation of a professional is to avoid paying a commission for a broker's services. And, while many For Sale By Owner home sales are successfully conducted, there are a number of concerns that prospective homebuyers must be aware of before entering into a such a transaction. For a detailed explanation of the advantages/disadvantages to buyers in purchasing a FSBO home from an unrepresented seller and a vice-versa review of the advantages/disadvantages of selling a FSBO home as an unrepresented seller, click on the appropriate link below:
Foreclosure sales of real property occur when the owner of the property defaults on the terms of a loan and the bank or other lender holds a "mortgage" or "deed of trust" as collateral for the loan. Usually the default involves a failure of the owner to make timely payments on the loan. When this happens the lender institutes foreclosure proceedings in order to have the property sold, often at auction, in order to recover the amount of the debt. The exact foreclosure process depends on the particular jurisdiction of the property and can vary widely.
There are two main categories of foreclosure sales: (1) Bank/Lender Foreclosures; and (2) Government Agency Foreclosures. Each is discussed briefly below:
I. Bank/Lender Foreclosures -- When a bank or other non-government lender institutes a foreclosure, an auction sale often takes place at either the county court or the property location. If the bank or lender has reposssessed the property prior to the foreclosure sale, it is referred to as a Real Estate Owned (REO) foreclosure sale. While there some reliable online sources of listing information for lender-instituted foreclosure auction sales, there are also some scam sites and other sites advisable to avoid. Some, but not all, foreclosures are advertised through the local MLS system. If you have questions about the foreclosure process or would like a list of recommended online sources of foreclosure listings, please contact me.
II. Government Agency Foreclosures -- When the U.S. Government sells a residential property via foreclosure, it is usually done through one of two agencies: (1) the Department of Housing and Urban Authority (HUD) when a borrower defaults on a Fair Housing Authority (FHA) loan; or (2) the Department of Veterans's Affairs (VA) when foreclosure is required against a home purchased through a VA-financed or VA-guaranteed loan. Most foreclosure homes for sale by the U.S. Government are available to be viewed online at www.HomeSales.gov.
When HUD or the VA needs to institute foreclosure proceedings, it sub-contracts with the following professional property management companies to administrate the transaction:
HUD -- HomeSource Real Estate Asset Services, Inc.
VA -- Ocwen Financial Corporation
** SPECIAL NOTE ON FORECLOSURES **
Contrary to common sentiment, buying a foreclosure property does not automatically mean that you will get a great deal or even a below market price. As with any other financial investment decision, buyers should conduct their own due diligence on the property and the foreclosure process. While money can be made through foreclosure purchases, novices and bargain hunters can and do get burned. A fantastic MONEY Magazine Article about the risks related to foreclosures can be read here or through the following link: Foreclosures: Bargain Hunters Beware!
As an alternative selling option, some home owners voluntarily elect to sell their home through an auction process. (This is much different from foreclosure auctions which are instituted against a homeowner by a lender due to a loan default.) Depending on the circumstances there may be reasons why the seller would favor selling at auction--most likely to try procure a quick sale. Non-foreclosure auctions are typically conducted by private auction companies.
There are special considerations that buyer should be aware of before bidding at an auction. For example, in most cases buyers are not permitted to conduct an independent, detailed inspection of the property before bidding. In addition, the purchaser of the property is generally responsible for paying all or most of the transaction's closing costs (whereas in MLS-listed transactions, closing costs can be negotiated and split between buyer and seller). Like with foreclosures, purchasing at auction is no guarantee of a good deal. Buyers need to educate themselves in advance about the property and the auction process.
