Housebuyer22…, Home Buyer in Highland Heights, OH

Advise for First Time Buyer on REO Process without Realtor

Asked by Housebuyer2244, Highland Heights, OH Wed Apr 14, 2010

Hello! I am a single and single income individual doing research into POSSIBLY purchasing my first home. I am in the very early stages and have not yet visited a bank to be approved. I am not looking for my monthly mortgage to take up a large portion of my salary as I feel comfortable saving and enjoy traveling and other activities. Based on my income (approx $34,000 per year) and desire to not have a mortgage exceeding 1/3 my income, I do not know if homeownership is currently an option for me/my location. I am in grad school (paid for by my parents), so I might have to wait until I graduate and obtain a higher paying job before I can start this process.

HOWEVER, I am hearing people at my work saying that sometimes banks are willing to accept much lower offers on REO homes. My concern is that I do not have a realtor. I feel bad finding a realtor to take me to view homes of interest because the listed prices are out of my price range;
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Only you, perhaps along with the help of a loan officer, can determine whether or not you are ready financially to take this on.
I am not from your area, but in general, REO properties can be in pretty bad shape. Some are more than bad. Also, banks don't want to be homeowners, but they don't want to lose money either. In some markets, REO properties are being snatched up by investors with cash and I honestly haven't heard of people being successful in lowballing banks. They are pretty good at hiring people to find out what the property's real market value is. If its a real fixer-upper or a tear-down, it will be priced accordingly. I'm not sure that this is what a busy grad student who is also working wants.
My general feeling, understanding that I know nothing more than what you've told me, is that you would be better off waiting.
Waiting until you are out of grad school.
Waiting until you get that higher paying job.
Waiting until you are ready to take on not only the financial burdens of home ownership but the time involved in it as well. Between grad school, work and a home that most likely needs work (even homes that are in good shape consume time) that seems like a lot to have on your plate.
If you enjoy traveling and other activities, then your plate will be overflowing.
Of course, this is only your decision to make but this is not something to go into lightly.
There is no harm in waiting but there could be quite a bit of harm in forging ahead in purchasing something that may be over your head.
Just my humble opinion.
I wish you the best in whatever you decide to do.
0 votes Thank Flag Link Wed Apr 14, 2010
Wow! I am honored by your Best Answer! Much appreciated!
0 votes Thank Flag Link Thu Apr 15, 2010
HI there, as a first time buyer, you will surely benefit from the services of a realtor. I agree with Keith, the fact is this - you are far more likely to waste your own time looking at homes that exceed your budget. Desireable REO homes, once listed and available, are listed using the services of an agent to price them out at an attractive price. This price often draws quick and in many times multiple offers that takes the price over asking, often to the market level or perhaps slightly below.

So here is my advice - get yourself an agent that can help -with the support of a reputable mortgage rep- you understand your real budget and then focus like a laser beam on properties that you CAN afford to buy.

Keith is right, there is $8,000 of real money on the table that will soon disappear. You'd be far wiser to pursue this than a pipedream.

I've watched too many people go down the path you are considering - and end up with nothing but confusion and frustration. Work with a pro and buy yourself a home.

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:
0 votes Thank Flag Link Thu Apr 15, 2010
FYI...very few Realtors will work with unrealistic buyers. If they will, then you should worry. Interest rates are going up. Meaning it would have been smarter for you to be in escrow to take advantage of the Federal Tax Credit AND the lower interest've lost one, and if not in escrow by April 30th, you will lose the other...
0 votes Thank Flag Link Wed Apr 14, 2010
Keith Sorem, Real Estate Pro in Glendale, CA

The very first thing you need to do is get pre-approved. It doesn't help you to not know. You won't just have a Realtor working for you for nothing, you might end up in a disappointing situation. Most Realtors worth their salt won't take a buyer around who hasn't been pre-approved.

I can help you get the pre-approval you need to get started. Howard Hanna has an excellent in-house mortgage department. Then, when you know where you stand, we can start looking at all kinds of properties, including bank-owned.

Call me at 330-687-4394 if you'd like to get started.

Best of luck!
0 votes Thank Flag Link Wed Apr 14, 2010
I put a couple of articles to look at. They show some things you may not be aware of. Below them I put some blogs I wrote. They cover the most basic things a buyer should know or find out about. I hope they help.

Don’t Bet the Farm on the Housing Recovery…
The index’s current signals are negative. After peaking again in September 2009, it has been falling steadily, suggesting that home prices may have reached another downward turning point.

Look at the mortgage resets below…
How foreclosures will affect everything when buying a house. Even regular sales.…
Does it make more economic sense to rent or buy? Using your numbers find out below.…
Why renting could make sense even if buying is cheaper (worth considering)…
Do low interest rates make it a good time to buy a house? Surprising ideas inside.…
A basic overview of the home buying process. Simple and easy to follow.…

Something you will find nowhere else. Questions to ask and find out for yourself before buying any property. It could save you a lot of trouble later on.…
0 votes Thank Flag Link Wed Apr 14, 2010
Sorry, must correct my spelling error, "feel bad"

Also, I missed your last question about liens and city codes. You can hire a title company to do a search ahead of time to check on that. The company I work for does that as a service for me, but there are some title companies that will do this for as little as $25.

As far as the city code violations, in Wisconsin we have websites that we can go to that gives us current property information violations. In addition, my experience has been that the city is so happy to see fresh new owners come in that even if there are violations such as painting, broken windows and minor items such as these, they are willing to extend the deadline for the new owner to help them get on their feet before imposing any type of penalty.
0 votes Thank Flag Link Wed Apr 14, 2010

Go ahead and contact a realtor if you qualify they will help you. Based on income you are looking at possibly $120K for loan, you need 3.5% of that for a down payment, 2 years on the job and 620 Fico score these are some of the requirements. In a bank owned home the representative is also a realtor.
0 votes Thank Flag Link Wed Apr 14, 2010
Dear Housebuyer22,

You sound like you have a good head on your shoulders. I will make a few suggestions for you because my specialty is first-time home buyer.

First, you are extremely smart in not exceeding 1/3 of your income.

Secondly, I am from Wisconsin so I do not know the market in OH. But if you are willing to get a "fixer-upper" or you are not extremely fussy, there may be something out there for you.

Third, don't limit yourself to REO homes. Why you might ask? Because, when you buy a home your lender is going to send out an appraiser. That appraiser is now basing their opinions on all the homes sold -usually within 6 blocks and within 30 days of the subject property. That being the case, it has brought down the price of all homes - bad for sellers - good for buyers.

Be that as it may, this is a great time to buy. Your very first step should be to meet with a reputable lender and I underscore reputable. Check with friends, family, co-workers, internet sources and then interview them until you find a good fit. Then do the same when searching for a realtor. The lender will tell you what you qualify for and the agent will be happy to help you find a home. Then you won't have anything to "fell bad" about.

Kudos to you for being so smart at such a young age.

Web Reference:
0 votes Thank Flag Link Wed Apr 14, 2010
My concern is that I do not have a realtor. I feel bad finding a realtor to take me to view homes of interest because the listed prices are out of my price range; I just want to see if the banks would accept a "low-ball" offer once I get loan approved. Most people advised me that realtors dislike when people submit low offers to banks and have to spend time taking them to all these foreclosed homes. I am not going to be buying an expensive home, so the realtor would not make a lot of commission from me. I am aware that realtors are busy and I dont want to waste their time.

Is there any possible way for me to view a house without my own realtor (something like paying a fee for the bank representative to show me the home)? I know I do want to purchase the home I chose through a realtor because obviously purchasing a foreclosed home is a very complex process and you need proper representation and someone that understand the process. But in the mean time, is there a way for me to view these home that I am interested in seeing?

Homeownership might not be an option for me and my salary, but a couple people at my work have purchased foreclosed homes in great condition (or minimal work needed) at 50% less than what the bank was asking.

Any suggestions for resources? I do pay for realtytrac because it is just easier for me to do searches (even though all that info is available for free on the county website). I also check the Cuyahoga County and Lake County auditor sites for info on property tax amounts. I also view the property on google maps and drive past the homes. Any other tips/webistes for me?

Also, am I correct in assuming if the home is REO, there are no liens for the buyer to pay? But the buyer could still be responsible for back taxes, bringing the home to city code, and obviously home repairs if applicable.

Thanks, and sorry so long!
0 votes Thank Flag Link Wed Apr 14, 2010
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