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.
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 of luck!
Keller Williams Realty
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,
I would encourage you to look at ALL hones within your price range and not focus just on foreclosures.
DRE 01909514, NMLS 396952
Generally, no; however, if you hire a professional RealtorÂ® 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 future interests of others in the property
-Easements on the property
-Variations in the names of grantors and grantees
-Variations in the chain of title
-Outstanding dower interests.
-Adverse possession claims
-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"
If you enjoy the â€œthrill of the dealâ€ 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.
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.
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