In his article titled “Sellers Market, Buyers Market or … Lenders Market?” Realtor William Johnson asks, “Buyers rule? Not so fast. Certainly that’s not quite true if the property falls under the category of distressed property.” John Williams agrees that distressed property usually needs a lot more than a paint job. “Property is considered distressed if it has been foreclosed by the lender or the owner is seriously late in making payments or the property is ‘upside down.’ Upside down denotes the value of the property is less than the mortgage amount,” said Williams. According to Williams, a buyers’ market means buyers have greater control of the time frames and also many of the terms, with a plethora of favorable contract conditions thrown into the picture. Buyers typically pay less than they might in an active sellers’ market and quite often have a larger selection of properties to choose from. Purchasing normal listings, then (not distressed ones) these days can indeed mean that buyers are in the proverbial driver’s seat. A lenders’ market is one where the majority of the market is made up of distressed property sales. A property is also said to be distressed if the value of the property is less than the mortgage or trust deed amount and the owners are unable to keep the mortgage current, and therefore need to get out from under the payments. A foreclosed property is referred to as “real estate owned” (REO). When a property owner wants to sell a property for less than is owed on it, that is referred to as a “short sale.” “A lenders’ market can have a combination of these characteristics. Buyers’ benefits in a given offer to purchase are stripped away, including pest inspections and clearances, closing costs, home warranties and repair requests, with the lender opting to sell the property in its present physical condition,” said Williams. He goes on to explain that lenders look for the highest possible price with the fewest number of contingencies (conditions of sale). Only buyers with pre-approved loans are considered, and in the case of REOs, lenders give greater priority to “all-cash” offers over offers containing the use of financing, even if the offering amount is slightly less. Properties sold “as-is” require buyers to be particularly diligent with property inspections, Williams points out, while lenders will tighten time lines and may even impose a penalty for delays in an effort to liquidate their albatrosses, so to speak. “The essence of the lenders market, then is ‘take it or leave it,’” said Williams. REOs and short sales can be good deals, but extra diligence and careful consideration on the parts of buyers and their agents is vital. We thank San Diego RE/Max Realtor John Williams for his timely consumer information. Writer Dena Kouremetis can be reached through her Web site at communic8or.com. Folsom Re/MAX broker associate Beth Mergens is available at 947-3993.