Home Buying in Burbank>Question Details

prasanna.sru…, Home Buyer in Burbank, CA

I am a first time home buyer. Is it advisable to go for a ForeClosure property?

Asked by prasanna.sruthi, Burbank, CA Wed Jul 3, 2013

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17
Hello Prasanna,

There was really not much of a difference between acquiring a foreclosed home or at home that is listed for sale. However the process of acquiring a property "in foreclosure" (short sale) can sometimes be cumbersome as the current homeowner needs to prove their hardship and the bank must be willing to take the best offer on the property.

Each lender has their guidelines on lending their money to buy foreclosed homes.

The two common ways of buying a foreclosed home are through a real estate agent (home that has already been foreclosed) or through a public auction (trustee sale).

There are many factors to consider when buying a foreclosed home compared to a traditional home purchase.
REO properties are an affordable housing option, but there are also more things to watch for with this type of home purchase. If you are house hunting, you may want to consider buying a foreclosed home, also called a real estate owned (REO) property.
An REO property is owned by the lender as a result of the previous owner defaulting on the loan. This is also known as a foreclosure property or a bank-owned property.

Negotiating the purchase price of a foreclosed home may take a little longer than a typical real estate transaction because the process may require multiple levels of approval. First, the bank will have to approve the offer. In some cases, an investor may own the property and will have to provide approval as well.

Timing varies by lender.

I wish you all the best and please feel free to reach out to me if you have further questions.

Vinu Kumar

Work: 800.846.1619
Mobile: 949.887.2567
Fax: 626.628.1956
Email: emailvinukumar@gmail.com
1 vote Thank Flag Link Thu Jul 4, 2013
Hi,

I would say its not as advisable to go for foreclosure properties, as they often need a lot of work/repair and also the buying process is longer and more complicated. It is also more difficult to get financing for foreclosure properties. However, if you are on a limited budget, you can sometimes get a great deal, but you have to be very patient.

Interest rates are currently still low and it is a great time to buy. Have you been pre-approved for a loan or are you looking to purchase all cash?

Please feel free to contact me directly at (310) 717-1321 or JamieTian@RodeoRE.com with any questions/concerns. Let me know what you are looking for (budget, locations, number of bedrooms), and I would be happy to send you a list of available properties that fit your search criteria.

Best,

Jamie Tian
Rodeo Realty
(310) 717-1321
JamieTian@RodeoRE.com
DRE #01920120
Web Reference: http://www.jamietian.com
1 vote Thank Flag Link Wed Jul 3, 2013
You should look at foreclosures as well as non-foreclosures. The thing with a foreclosed home is it often needs a lot of work. So, you will need more money to fix it up. One way of doing this is with what is called a 203K loan, which allows you to borrow the purchase price along with fix-up costs.
1 vote Thank Flag Link Wed Jul 3, 2013
Depends. Are you able to make minor repairs? I highly recommend getting a thorough home inspection to identify any major repairs. Distress property on average is sold at 15-25% discount from traditional sellers.
0 votes Thank Flag Link Mon Aug 18, 2014
A foreclosed property is just like buying any other home. The main difference is the seller (Bank) has never occupied the home so they will not be able to disclose any known issues with the property, so make sure you hire a professional home inspector, and maybe talk to the neighbors to see if they have any info on the property. Good luck.
0 votes Thank Flag Link Mon Aug 18, 2014
I would say yes but it depends how handy you are & if you are not afraid of repairs ! When you buy from a seller you get a sellers disclosure ( what they know about propriety )& usually a little love and care .When you buy a R.E.O. there is not a seller's disclosure & the prior owners have sometimes been a bit rougher on the house ,that is why the homes are usually a bit less expensive than a RETAIL seller !Good Luck !
0 votes Thank Flag Link Sat Jan 18, 2014
Foreclosure is a great option! Make sure to find your lender's qualification regarding foreclosures and shortsales. Also, get information regarding the current homeowner's situation in regarding to their Foreclosure situation.

Best of luck!

Yvette Betancourt
bre 01903414
Keller Williams Realty
http://www.BetancourtRealEstateGroup.com
0 votes Thank Flag Link Tue Dec 17, 2013
All other answers are good to reference it! Without knowing your situation, Yes and No! It is depending on what can you do and how is your time and financial situation? There are lot of factors have to put together to fit your need. Most buyer like to go discretely to the listing agent that wish to buy chipper that who most likely to sell you but you have to run with all consequence details from Foreclosure property. A good buyer agent will sit down with you and analysis your situation and can be determining whether it is good fit for you.
0 votes Thank Flag Link Sat Nov 23, 2013
As a first time buyer or any buyer for that matter when buying a forecloosure property your inspections will be extremely important. Since the bank has never lived on the property, they can't tell you anything about it so at your expense, get as many inspections as you can as the banks usually sell their properties "as-is" without repairs. I would suggest at a minimum to get your physical inspection, a sewer inspection, roof and chimney if there is one.
0 votes Thank Flag Link Tue Oct 8, 2013
Buying a foreclosure property is not too different from buying a standard sale. What specifically are your concerns? Most of the work and research is handled by your Realtor and you as for you as a buyer, just make sure you are pre-approved by a lender. Let me know if I can be of further assistance! :)
0 votes Thank Flag Link Tue Oct 8, 2013
Foreclosures are usually cheaper than retail sales,the reason for this is that they usually need some work.When you buy from a homeowner you get a sellers disclosure telling you all about the house from a bank you don't .,so there may be some issues with the house .You should hire a licensed home inspector to check out the house . Good Luck !
0 votes Thank Flag Link Mon Jul 15, 2013
Prasanna,

From the lender's standpoint, it really makes little difference. The property must be in good enough condition that it will appraise sufficiently, but otherwise, your real estate agent can advise about specifics in your market area. If you'd like more help with understanding the basics of the mortgage process, please join our free webinar (below).

Best of luck,

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes Thank Flag Link Thu Jul 4, 2013
There are relatively few foreclosures these days. Those that do show up on the market usually get a high number of offers and sell to the most qualified buyer.

I would encourage you to look at ALL hones within your price range and not focus just on foreclosures.
0 votes Thank Flag Link Wed Jul 3, 2013
It depends on if you mean a foreclosure as in an auction or a bank owned property. An auction I would say no. A foreclosed property that is an REO (bank owned) is ok. Many bank owned homes can be in bad shape and the banks don't do repairs or pay for many other items that a traditional seller will pay for.
0 votes Thank Flag Link Wed Jul 3, 2013
Hi, I will not recomend to look for forclosed homes, it's better to look for homes that are owned by the bank or REO. I will recomend as a loan officer to get a letter of prequalification from lender befor you start house-hunting, because all sellers are going to prefer working with a buyer who's already secured financing rather than wait around for one who needs to get loan approval and take the risk that it won't pan out. If you don't preapproved from bank or lender feel free to contact me (818) 863-6757 Alvard Daghbashyan
DRE 01909514, NMLS 396952
0 votes Thank Flag Link Wed Jul 3, 2013
Hi Prasanna:

Generally, no; however, if you hire a professional Realtor® with proficiency in this area you should do just fine.

There is more than just one type of disressed property. Here's a quick relative risk scale for distressed property (1 being the most risky):

1) Trustee Sale (bidding on court house steps)
2) Auction Company Sale (you bidding in a pressure environment)
3) REO (reduced disclosure requirements),
4) Short Sale (primarily risk is approval timeline)

1 thru 3 above have a higher probability for issues with Title, referred to a "Title Defect" or "Cloud on Title", which means you would not have clean/clear ownership - not a comforting thought. Some examples of situations affecting Title are:

-Outstanding mortgages/liens
-Restrictive covenants
-Outstanding future interests of others in the property
-Encumbrances
-Easements on the property
-Variations in the names of grantors and grantees
-Variations in the chain of title
-Outstanding dower interests.
-Adverse possession claims
-Structural encroachments
-Existing violations of equitable servitudes or covenants
-Zoning restriction violations

Here's an interesting situation I have run into:
"REOs: How Buyers Can Avoid Hidden Unsecured Property Tax Liens"
http://tinyurl.com/asvofat

If you enjoy the “thrill of the deal” proceed with options 1 thru 2. If, instead, you like to know what you are getting for your money stick with 3 & 4 and non-distressed property.

-Steve
0 votes Thank Flag Link Wed Jul 3, 2013
Prasanna Sruthi,
It generally doesn't matter. Some foreclosures are in bad shape. But, some are not.

A more important question is, have you prepared all the preliminary paperwork? You need a letter of approval from a direct lender, proof of funds available for closing and current FICO scores.

There are also some other programs for first time buyers. You should check them out to see if you qualify for things like a LIFT program.

Please call or send an email if you need help with any of your real estate needs.

Tommy Lee
DRE #01723594 SFC (Short Sale & Foreclosure Certified)

Premier Service® Professional
tommy.lee@dilbeck.com
323-821-2292
говорю порусски
0 votes Thank Flag Link Wed Jul 3, 2013
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