Many First time home buyers these day do not have a lot of cash for a downpayment and therefore probably not for any repairs that many times are necessary to get the home financed that the banks many times will not do. Also, by the time the bank has the property back after no investors bought it at the sherrif's sale, they are many times deep into the equity and not always are willing to just give the home away. You might have a little better luck with pre-foreclosures and short sales. Short sales could be very complicated and drag for a long time, but the banks do not want the houses back and are willing to take less than what's owed and prevent the costly foreclosure. The deals are out there, no matter if it's a foreclosure, short sale or a regular home sale, so I advice not to eliminate the rest of the homes, since many times there is a great deal that is not a foreclosure you might miss.
If you find a foreclosure property and the seller has a good equity position, there are some possibilities for good deals.
Also, check into bank owned properties. These are properties where the foreclosure process is complete and the bank is the seller. Bank owned properties are usually priced competitively.
If you feel you have the financial wherewithal and emotional fortitude to look at foreclosures, be sure that the agent that represents you is a real specialist that works exclusively on those types contracts.
An analogy: "I've been told that the Boeing 757 is the best plane for me to fly as a novice pilot. T or F?" Well, the 757 may be the right plane to fly for a 2,500 mile trip. (It has a maximum range of 3,395 or 3,900 nautical miles, depending on configuration.) But it wouldn't be the right plane to fly between Washington, DC, and Richmond, Virginia, or between New York City and Tokyo. So, under the right conditions, it's the "best" plane. But for a novice pilot? No way.
Same here. As a first time home buyer, look for a good value and a smooth transaction. That means avoiding foreclosures and short sales. There are plenty of good "traditional" values out there.
I'd suggest instead to pick up a property that is in a short sale. I know a CPA and that's all he does, short sales. I don't understand why they offer realtors classes on how to do short sales - unless that is what they want to focus on. You just can't succeed in foreclosure or short sales if you don't dedicate yourself pretty much full-time. There are too many nuances, and now state law changes to these types of sales and dealing with the bank, proper language in the Purchase & Sale.
My past experiences in short sales have been very profitable & reasonable - because I worked with the CPA as a team, to get them. So if you have a team approach with solid experience from team members, that is the only way to make money on these type sales. Or, work with an attorney in this area that provides you leads, with an agent that knows the area, and get a thorough inspection so you know what you are in for. You can't just do one or two a year. Good luck with your efforts!
I've always recommend inspections and enough time to do them, and here there was no exception; because, while the property had a great buying price it didn't mean it was a great house. My clients, at their option, waved the inspection. Fortunately for them, until now, they have only spent about $ 1,200.00 to make it habitable.
While this was not a devastating experience, it is extremely important that you as a buyer understand the disadvantages of buying a foreclosure. These institutional sellers want to sell their properties at standard market price with out the standard advantages. A private seller, most of the time, is willing to renegotiate the outcomes of the inspection and a few other items. With foreclosures, you even give up the right to complain to anybody for any minor or major wrong item with the property, and this is were the money spent in your inspections is well justified.
You should be willing to loose the cost of the inspection instead of loosing a more significant amount. If something doesnâ€™t make sense get questions answered. Realtors are not law practitioners, but if your question involves legal advice she / he should let you know to consult an attorney.
I agree with not limiting yourself to just foreclosures, but I would at least look at them alongside the other inventory out there.
First time buyer "bargains" may be later in the season...say October. But I wouldn't recommend strapping yourself with a foreclosure property as your first "home". Get something you will be happy living in, in a place you really want to be for awhile.
Not always is my answer. I have seen some great deals on foreclosures, but that isn't the whole story. I have found that many bank owned properties have big deferred maintenance issues and also in many cases are not priced accordingly. There is no big discount for buying a bank owned property most of the time. In fact, they can cost you more at times if you aren't careful to avoid all of the loop holes.
As a first time homebuyer, I definitely understand that getting the best deal is probably what you are looking for - just make sure that you have someone guide you through the foreclosure maze - one tip from me: make sure that you have the form 22k filled out so that all the utilities are paid prior to the property becoming yours (so that you aren't stuck with a giant water bil, etc.).
Honestly, I am seeing better discounts from builders for a brand new house vs. some of the banks for homes in need of love.
Good luck - right now is a great time to be a qualified buyer!
You have a lot of opinions here so I will just throw in my two cents. It depends on what stage of foreclosure the home is in. If the seller is facing forclosure, they may be willing to negotiate a lower price with you. If the home is already foreclosed on and owned by the bank, they want to get the most money for it similar to a seller not facing forclosure. So it is a mixed bag. The bottom line is that everyone wants to get as much as they can for a home. You on the other hand want to find a home you love, whether or not it is a foreclosure or not.
Work with a real estate agent( short sale or foreclosure)that knows what he/she doing. If it;s a short sale; a complete package is a most. Litigation department don't have the time to deal wth un completed package. Make sure you know the true condition of the property ( most short sale are in pretty good shape at least here in Chicago, Il) so it could be communicate to the litigation dpt. by whom ever handling the negotiation with the agent . One number that you really need to know is the BPO.
Broker Price offer. The Lender and the investor do pay attention to this number.