Foreclosure in 21401>Question Details

Sarah, Home Buyer in Annapolis, MD

How does buying a foreclosed house work? Is it really as cheap as it seems?

Asked by Sarah, Annapolis, MD Tue Jan 15, 2013

I have found a few that the total price for the house is around $2,000. Is this for real? How does this work!?

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Natalie Dean’s answer
Hi Sarah:
Loads of good advice by fellow Realtors. However I have to say that show a number of foreclosures that mirror the condition of short sales. The reason? Banks realize that their return on value is much better if they have taken the steps to make some repairs to the home. For instance STOP the leak that is causing the damage to the roof, ceiling and the floor and possibly the start of mold. In those instances often times they may have done at least patch work to the drywall or ripped out the bad ceiling and floors, so now its just up to the new home owner to do the replacement. When damage is more extensive and even when minor the resurgence of 203k loans has been a fantastic vehicle for my principal buyers to use to bring the home to liviable condition and get some the bells and whistles they have been dreaming of in a home. I work with a wonderful 203k team.

I am partial to foreclosures, my very first home was a fabulous condo in Reston VA that was foreclosure that had been on the market for 5 months. It looked fantastic and with some carpet and paint I was one happy 21 year old! Still have fabulous memories. ;-) Don't run from foreclosures just ensure that you have a really strong team who understands the process and can guide you through any pitfalls.

All the best!
0 votes Thank Flag Link Mon Jan 21, 2013
As a lender I find foreclosures an easier process than short sales for the most part. It works the same as other offers and there is a discount but make sure the home is in good shape or you could run into problems getting the loan. There are loans to make repairs to homes as well though if you need them. I can't imagine a home for 2,000 maybe it was a rental? I have heard stories also about people running scams so verify the source and if ANYONE asks for money to do anything in regards to buying that home or any home. Hope this helps and let us know if you have any questions.

Thanks,

Brent Mendelson
Senior Loan Officer
1ST Mariner Mortgage
O-240-235-5314
C-301-412-0259
F-240-235-8236
Bmendelson@1stMarinerbank.com
Lending in all 50 states
nmls#111407
1 vote Thank Flag Link Tue Jan 15, 2013
Hi Sarah
It sounds too good to be true and there would probably be a bidding war if that is the case!,
I am not sure where you found this particular home but $2000 does not sound correct for the Annapolis area since you cannot buy a lot for $2000 unless it is unbuildable. .It could be that it is a misprint and at least 1 or 2 zeros were left out.You can get some good buys with foreclosures but keep in mind that you are buying a property as is with a bank and in most cases the bank will not pay closing costs.Therefore, it depends on what type of financing you are using. If you are going VA or FHA it is sometimes hard to buy a property as is especially if the property needs work. Also, if you need closing costs help it could be a problem with a bank foreclosure.We offer homebuyer counseling as well as lender preapproval through our in house lender. This way you would know whether buying a foreclosure if right for you.Hope this information helps!
http://www.john-donna.com
0 votes Thank Flag Link Tue Jan 15, 2013
Sarah,
One final thing, the price you mention seems wrong for the area. Is this $2,000 a starting bid for an auction perhaps on a home that needs to be fully rehabbed?
0 votes Thank Flag Link Tue Jan 15, 2013
Maybe... Here's the link to the site where I found it...
http://www.homes.com/listing/180577701/300_Melvin_Ave_ANNAPOLIS_MD_21401
Flag Tue Jan 15, 2013
Sarah,
Like many things in life, "if it seems to good to be true, it probably is"
Despite that truism, Foreclosed homes for sale are often a good deal, but they are not for the feint of heart nor the novice, inexperienced buyer. They often take months to get to closing. They often involve getting the approval of multiple stakeholders, i.e. first mortgage holder, 2nd mortgage holder(if there is one, and the mortgage insurance company. all of these firms must agree to acccept less than the amount than they are owed. And what frequently happens, is after spending months gathering documents, and jumping thru hoops, one party kills the deal by refusing tom accept the buyer's offer price.

Bottomline, if you choose to go down that route, be very patient, expect delays and hassles, and don't be disappointed if it falls apart. But you might be one of the lucky buyers who gets a good deal and buys a home at below market pricing when its all over. George Gorayeb 410-903-9026, Anne Arundel Properties, Inc.
0 votes Thank Flag Link Tue Jan 15, 2013
Dear Sarah,
Buying foreclosed homes can be worth it.The prices are in line with what the current market value is for surrounding homes. Price isn't normally negotiable at the offer stage. You do have to be careful though since often foreclosed homes can come with maintenance needed since the prior owners most likely didn't have the means to maintain the home properly, The banks will often give you a home warranty to help with any issues that can arise with hvac, plumbing, electrical and so forth.
I can share that working with an agent that is skilled in foreclosures is extremely important since there is an art to how to write the offer, build rapport and negotiate. Banks nowadays price low to drive bidding wars on the price, and trust me, the wars happen! There will be multiple offers submitted where you will be competing especially if the home shows well as a foreclosure. Though the house is marketed AS-IS most of your negotiation will come on the bank agreeing to make repairs after your home inspection. I have been able to get new hvac systems and a new roof for clients who bought foreclosures where the home inspection uncovered these sorts of issues. On the other side of these transactions is another mindset and since I have a background in mortgage/underwriting I know how to write an offer that will win. My clients where were competing with 5-12 offers on any given time, and the bid we wrote was accepted over the other submissions. Please feel free to contact me directly if you'd like any additional assistance. I hope this helps!

Regards,
Ariana Loucas RE/MAX Advantage (Licensed in MD & DC)
0 votes Thank Flag Link Tue Jan 15, 2013
Most foreclosed homes are sold as is. And you are dealing with a bank representative rather than a personal seller. This can slow the process down and add some layers that you wouldn't see on a traditional sale. And it varies with the bank or bank representative/company.

Some foreclosures are great deals. Particularly if it is a fixer upper and you have the ability to pay cash. Others won't pass standard FHA and VA financing guidelines and are excluded from the selection process if you are using either of those loans.

If you are buying the home to occupy yourself you will also have an advantage with HUD and VA foreclosures as they allow a certain period of time to offer the house only for owner occupants.

I have never seen a deal on a foreclosure where you can get a property for $2,000 short of some row homes in Inner city Baltimore. If by any chance you are searching on RealtryTrac.com (affiliated with Trulia), their properties are rarely if ever truly available. They just show properties that are in default.

Visit us on-line at http://www.FortMeadeHomes.com if you would like expert guidance on buying a home or renting a home in the Fort Meade area.
0 votes Thank Flag Link Tue Jan 15, 2013
Hi Sarah! Foreclosures tend to have competition if it is a good property. Sometimes they need updates or you may even need major repairs. Your Realtor along with a licensed Contractor will be able to help you with the calculations. Contact me and I will help you. miekeba@heymannrealty.com
0 votes Thank Flag Link Tue Jan 15, 2013
Purchasing a foreclosure is similar to purchasing any other property except the bank is the owner. The bank normally does not respond to offers on weekends or evenings so sometimes you must wait for a response to your offer or counter-offer. The bank and the listing agent set the price. The price is usually reasonable but not very flexible. I don't know of any houses in the Annapolis area selling for $2000.
0 votes Thank Flag Link Tue Jan 15, 2013
http://www.homes.com/listing/180577701/300_Melvin_Ave_ANNAPOLIS_MD_21401

Here's the link of the site where I found it
Flag Tue Jan 15, 2013
The transaction is just like any other except the bank is the owner. I haven't seen any houses in Anne Arundel County for $2000. What area were you looking in?
0 votes Thank Flag Link Tue Jan 15, 2013
http://www.homes.com/listing/180577701/300_Melvin_Ave_ANNAPOLIS_MD_21401

heres the link to the site I found
Flag Tue Jan 15, 2013
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