There are six major categories for real estate sales. The major types of sales are:
1. Traditional
2. New construction
3. Short sales
4. Auction sales
5. REO sales
6. HUD Home Sales
It is a good idea for a home buyer to be informed as to the differences. And how the differences affect the home buying process. Some of the factors that will be affected are as follows:
1. Time frame for closing
2. Closing costs
3. Rights of disclosure
4. Customization, and upgrades
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Traditional Sales
Traditional sale usually refers to the resale of a home. The transaction may be between a private seller, and buyer. Also, traditional sales may include corporations. For example professional home flippers form an LLC's. They buy homes for the purpose of reselling. The home may have been a foreclosure, at the time the home flipper bought it. But, because title transferred to a person, or entity, it is no longer a bank owned home. The re-seller may market the home as a traditional sale. Corporations buy homes from private sellers, too.
A traditional sale may involve licensed agent representation. Or, it can be completed without an agent. However in Nevada, if the seller is represented by a licensee, the buyer must be represented by a buyer's agent licensee. If the seller is a licensee, in Nevada, the buyer must have a licensee assigned to him.
Regarding traditional home sales, here are some more important points
.
1. The seller has an obligation to be reasonably aware as to the physical condition of the
home.
2. The seller has a legal obligation to disclose, to the buyer, the condition of the home.
3. The buyer reserves the right to sue the owner for dishonesty, or negligence.
4. The buyer, and seller negotiate the sales price, closing costs, close of escrow, repairs, and
possibly a rent back clause.
5. The seller, buyer, and agents should read the preliminary report to check for any liens,
judgements, derogatory accounts, and mortgage balances, that could possibly slow down,
or prevent the close of escrow.
6. In Nevada, the buyer has the right to chose the title company.
7. A buyer should be aware of the right, and duty to order a home inspection by a licensed
professional.
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New Construction
New construction usually refers to a new tract home. It can also refer to a custom built home.
For a buyer this means
1. They can do some customization. For example, the buyer can choose the color of the
carpet, and walls, and types of counter tops. Fixtures, celing fans, and cabinets are
common items to customize. Often times, they can add a room, or leave an area open.
2. Typically, the time of completion is controlled by the seller/builder. If the market is slow,
the buyer can try to negotiate. But generally the price is set.
3. If it is a sellers' market, there may be a waiting list. .
4. Same as with traditional sales, the buyer retains the right to sue if they believe the seller
(home builder) was negligent.
5. Same as with traditional sales, buyer should have a home inspection.
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Short sales were very common during 2008 to 2013. As of May 2014, they constitute about 1/6 of the market. During the offer process buyer, and the seller negotiate the sales price, closing costs, and close of escrow time frame.
1. However, the contract must be approved by the lender(s)/ lien holder(s)
2. The buyer, or buyer's agent should review the preliminary report for liens, and
emcumbrances.
3. The time frame may be several months.
4. Inspections, title insurance, and disclosures are usually the same as with a traditional sale.
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Foreclosure Auction sales are typically held at the courthouse. Or, at set location. Auctions sales
are usually paid in cashier's check, or cash. These sales are usually paid the same day.
1. If home is occupied, the buyer typically cannot do a home inspection.
2. Usually the auctioneer will add their fee to the sales price. For example the winning bid
may be $100,000 to the lender. But, if the auctioneer has a 5% fee, the end price would be
$105,000.
3. The sale does not provide title insurance, to the buyer.
4. Certain liens may remain attached to the home. For example an HOA super lien, in Nevada.
5. The buyer receives no disclosures, no warranties.
6. The buyer has no rights to sue the past owner, the lender, or the auctioneer for defects.
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REO sales typically refer to bank/or lender owned properties. Even though the different homes may be found on the same website such as Homepath.Com, or Homesteps.com, Buyer should expect the home sale procedures to vary from lender, to lender. It is important to refer to MLS full data sheet, and lender website for specific instructions.
1. The sales price, closing costs and time frame is negotiated between buyer and the lender.
Most lenders have guidelines. Usually there is a little room for negotiation. The buyers agent
should research market conditions pass the information to the buyer. The final decision
should be up the buyer.
2. Typically the buyer signs a waiver for the bank to have no obligation for repairs, or
disclosures, NRS 113.
The buyer typically accepts the property "as is". The buyer receives no disclosures, from
lender. Buyer will still receive agent's disclosures. Ei "Get A Home Inspection".
3. The buyer is expected to sign the bank addendum.
4. The buyer should have a professional home inspection.
5. Buyer receives title insurance, upon close of escrow.
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HUD homes are homes that have been foreclosed, but they are not bank owned homes.
HUD home sales are organized through a management company. However the offer acceptance
is processed directly through HUD.
HUD stands for The Housing and Urban Development Department. Some details to understand
about HUD are as follows:
1. The purchase offer is input through the HUD website.
2. The winning bidder must submit a signed HUD contract, and earnest money check within 2
days.
3. Typically, the close of escrow must be finalized as soon as possible.
4. HUD homes have already had an appraisal done. So no appraisal is needed, if buyer is
using FHA financing. Unless, the home has not sold, and closed within 90 days of being
on market. Typically, there are no appraisal problems, providing the buyer has followed
HUD recommended guidelines.
5. HUD homes are pre-inspected for FHA insurance guidelines. An estimate for repairs is
disclosed at time of listing.
6. Buyers who over bid on the offering price, must be prepared to pay the difference in
certified funds.
7. Buyers who over bid, but do not close, will lose their earnest money deposit.
8. Home inspections should be done
9. Buyer will receive title insurance.
This list is generalized, and a short list of the characteristics of types of sales. Always use a licensed agent help you in the purchase of your home.
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