Paragon Real Estate Group DRE 01844627
You'll get a lot of opinions on this question. Mine is "it depends." Foreclosures can be a "fools gold" proposition, but there are a lot of factors involved. One consideration is financing. If you have enough cash to purchase it without financing, you'll be in a better position to compete for the property; but, you'll also have less protection built into the process. If you can't buy for cash, you may be able to purchase it using a renovation loan product, like the FHA 203(k) program. This program is very popular these days and and can allow you to purchase a property that you would otherwise not be able to get traditional financing for (due to the condition of many foreclosures). The downside to that program is that it can take a lot of time to actually get everything lined up (such as a general contractor's estimate for repairs, etc.) and a cash/investor buyer may squeeze right in and snatch away the opportunity. The upside to this program is that there are some built in protections that reduce the likelihood that the contractor will get away with ripping you off.
So, there are a lot of factors that can influence your decision (I've only mentioned a couple). Where you plan to buy is also important. Different places have different practices, laws affecting consumers' rights, supply and demand considerations, etc.
One of the best things you can do is to find a really good real estate agent in your area and discuss the options with him/her. Let them help you find the most sensible path for you. If you were in my area, and assuming several factors, I'd probably recommend that you search based on what you want to buy (price, location, size, style, etc.) rather than by type (foreclosure, short sale, standard resale), and if you find candidate properties of various types, deprioritize foreclosures. That is make them your last option all else being equal.
Hope that helps!
Your New York Connection,
I have dealt with foreclosure sales for nearly 20 years. First as a listing agent representing the bank during now exclusively on the Buyer side, I will tell you exactly what I tell my own buyer clients; foreclosures are rarely a deal. 6-7 times out of 10 the deal is fair, by the time you finish repairing/renovating the property and consider the additional expense and aggravation you could have bought a straight sale with less aggravation, from a Seller who will probably work with you to make the sale work and the price of each will be about the same. 1-2 times out of 10, you actually get a real deal. 1-2 times out of 10, the buyer ends up with a money pit.
The average first time buyer would be better off pursuing non-foreclosure properties.
are a number of considerations to make on REO inventory. But, like any other purchase you control
for the " downside "allow for the" uncetain " and try your best not to get overly excited or impressed
with the "deal ". Big factor in the REO market is the intensity created by price incentives for quick closing.
Everybody involved is scrambling to close the deal. No time for stipulations,contingencies, and review
normaly offered the buyer . Many times the seller has less information on the property than the buyer. All
of this said-. there are opportunities . I like HUD HOMES for those new to the REO market. They have
some of the same price incentives, and more.
First they are homes "bought back " from forclosing lenders. The frenzy is less , you are dealing with
a government agency, and the one who just happens to include FHA for financing..
Second the process of the acquisition by Hud takes time enough for a formal appraisal,structured
financing to new buyers and assessments as to property condition (seller disclosure ). Title
problems have already "come to light ".
Lastly, Hud has been in business for a while FHA even longer. They were out there before the" boom."
their infra-strucure for property disposition has evolved around working out the ' kinks ' in buying/selling
REO type inventory.
FannieMae has their Homepath Program -which has similarities you may want check out. They are
newer to the marketplace., Good Luck ! like everybody said: Get agents who specialize ,or
those at least familiar with these programs.!
BOB BRUBAKER HIGHLIGHT REALTY PALM BEACH COUNTY FL.
First time home buyer tips
Here are some helpful tips to get you started on the right path.
1. The first step before you do anything is to find out how much money you can borrow from a bank/mortgage company. Check with different lenders to see who can get you the best deal. Once you know what you can afford, then you can begin to plan.
2. Determine what you need in a home, not necessarily what you want in a home. Make a list of those needs to give to your Realtor. When you are searching for homes you will find that it is very rare to find a home that has absolutely everything you are looking for. If you stick to what you actually need, you will have better success in your search.
3. Research areas/communities that are of interest to you. Determine what things are important such as schools, proximity to shopping, restaurants, and local activities. Drive through the communities to get a feel for what they are like.
4. Learn as much as you can about the process of buying a home. Some local Realtors or lenders will offer first time home buying seminars. If you can find one in your local area it would be helpful to attend. If you cannot attend a seminar, look on the Internet for a home buyers guide such as the one at Bankrate.com - http://www.bankrate.com/brm/news/real-estate/BuyerGuide2004/
5. Select a local Realtor to help you begin your search for a home. You can search Internet sites such as Realtor.com or Homes.com, but a Realtor has access to all of the homes in the local MLS. They can provide you with information on the home, the area and answer any questions you may have. A Realtor can show you properties of interest.
6. Learn about the contract and what is involved. Your Realtor can take you through step by step the process of a contract. After it is signed by buyer and seller, it is called an executed contract. Then you would want to get a home inspection. If everything is fine with the inspection, then you can go forward towards closing.
7. Know what happens at closing. Again, a Realtor can walk you through what to expect at closing. You will need to have money for closing costs such as title search, processing fees, taxes, and insurance.
Buying your first home is an exciting and overwhelming experience. So make sure you are prepared.
Tammy Hayes, Realtor, Sandals Realty, Punta Gorda, FL firstname.lastname@example.org
Buying a foreclosure home could be a great deal for you. It is possible that there has been some major damage in the house due to burst pipes (a common occurrence on the east coast!) or vandalism and you should expect to either do repair work yourself, or factor in the cost of hiring out. Find yourself an experienced REALTOR to provide you with valuable information regarding comparable homes in the area to make sure that you don't have to spend more in repairs than you can possibly get in resale. If you would like any first hand information; http://www.RochesterHomeLocator.com... feel free to contact me; I have years of experience working with foreclosed properties. Either way you decide to go, good luck with your first homebuying experience!
Salafia Sold Team, RE/MAX Plus
http://www.FindRochester.com or http://www.RochesterHomeLocator.com
Get pre-approved, work with a local Realtor. I would not limit yourself to ONLY REOS but whatever fitst your criteria and parameters. Have you written out a "must have list"? Think about features you must have (example garage, pool, and etc) and as you look at homes, you will see things you like and dislike so the list will be in flux. Also, location. Can you handle the commute, are you close enough to friends and family?
Work with a local Realtor, as a buyer it shouldnt "cost" you anything and they can and will help you with all this and more. Best of luck, being a first time home buyer should be a FUN and educational experience. Find a Realtor that helps ensure that it is.
Best of luck.
Spirit Messingham, Tierra Antigua Realty, Tucson AZ
The big issue with foreclosures is that you are generally buying them as-is, and the banks will not fix anything. My experience is that this is not always an absolute, but it is closer to what you will experience than any expectation that the bank will fix up everything that is not right. So I agree with the other respondents who stress the importance of having a home inspection. That is a must for every real estate purchase, but especially so with a foreclosure.
If you want your home to be in a move-in condition, you will be disappointed with most foreclosures. If you will trade a few imperfections for a better price, then it might work for you. You may also want to look into a 203 (k) mortgage, which will allow you to not only borrow to purchase the property but also pay for renovations to the property. This can allow you to get the good price while also fixing up the property to meet your specifications.
There are pluses and minuses with buying a foreclosure. If you can make an honest self assessment of what you are looking for in a home, then weigh the relative pluses and minues and decide if a particular foreclosed property meets your needs.
Personally...my husband and I bought a foreclosure because we LOVED the house -- the floorplan, the location, the size...everything was perfect. Except...it had broken pipes, trashed carpet, missing appliances, and dead lawn. Still...we loved it, and saw the potential.
Make sure you have a good Realtor, and a good inspector. Good luck!
Each REO seller operates a bit differently from the other but in my experience, most transactions are fairly quick once you get the details ironed out. In fact the banks I work with want it done fast and with the least fuss possible. Sometimes getting signatures takes a little longer than you wished for and the main issue for most buyers here is keeping their good interest rate locked in long enough to get through the process if there are any delays. They will ask you to forego inspections, repairs and appraisals but your agent should not adivse that you agree to those terms. In some cases banks WILL make repairs but normally only those that are health or safety issues.
One big warning..... some banks have a crew go in and replace carpet, paint, repair damage and even replace appliances, but you don't know what has been covered up and there is little or no oversight to the quality of the work being done. Have very thorough inspections! Sometimes you have to kiss a lot of frogs to find your prince (or princess)!
Great Question and one every first time buyer should be asking. And yes I recommend Buying a Bank owned Property.
I specialize in foreclosed Properties. Bank owned and HUD owned Homes. There are a ton of great buys in almost every market. There are finance programs for bank owned homes as well 203ks and alike that will let you finance for repairs. The first thing you need to do Is find a local Realtor in your area that specializes in first time buyers. and that has experience in the deferent loan programs that are available in your area.
Make sure you interview your future Realtor before you go out looking. You will find if an agent has time to sit down and go over needs and wants before he sticks you in his car chances are you will have a Realtor for life. good luck And God Bless.
You'll need to ask yourself a few questions such as "Can I make the repairs myself or do I need to hire a professional?"; "Will I be able to finance the costs of the repairs or will I need cash to fix up the home?"; "How long will the repairs take and can I live in the home while the repairs are being done?"
Fixer uppers are a great way to start building instant equity in home ownership. However, keep in mind that you always make money on it when you purchase...not when you sell. Use the advise and experience of a knowledgable Realtor to help determine the costs of the needed repairs and value of the home once in top condition. Many homes seem "cheap" but actually aren't a good "value".
You may actually be better off finding a home that has been well maintained and in "move-in" condition. Though the price may seem higher than purchasing a foreslcosure, the cost and value be be better for you in the long run. Good luck and happy hunting!
Our recommendation is to not focus on foreclosures or short sales or regular sales but to establish your personal search criteria and then seek the most desirable home being offered as a price you can't afford to walk away from. From our persepctive, concentrating on one portion of the market may not be in your best interest.
If you are willing to put in some elbow grease a foreclosure may be a good deal. Almost all of them need painting and probably some type of carpet or flooring redone. These are mainly cosmetic problems and you can probably live with them and do them "down the road".
From there, a foreclosure property can go way downhill. This can include items that lack maintainance (the roof is going to need to be replaced) to malicious damage done to the home by the original owner.
The key to buying a foreclosure property is to know exactly what you are getting into since they are typically sold as-is. You will want to include a contingency for a property and other inspections in the agreement of sale to protect you in case a major problem is found. Keep in mind that these will be out of pocket expenses to you. Do you like the house enough to risk losing money if a major problem is found, the bank won't fix it, and you walk-away?
It is possible you could get a really nice home with minimal repairs.
Best of luck,
Long & Foster Real Estate, Inc
Lehigh Valley Office, PA
Also if you purchase a lender owned property you may find that you have many new friends in the neighborhood if you repair the property quickly.
.....I subscribe to as private research company that digs out the foreclosure auction sales from the court house steps, that get returned to the bank, and then tracks them while in the bank's inventory. If you are serious, let's talk.
David Cooper +1-702-499-7037
Foreclosures, short sales or conventional purchases each have their own strengths & weaknesses. Foreclosures are attractive in theory because they seem like a great deal, but this isn't always the case. Banks want to maximize the return on their homes just like anyone else. Because they never lived in the home, they will not be able to disclose any issues that a regular homeowner might know about. Some issues will be revealed through a good inspection, but others may not be evident unless you actually live with a house.
If you are comfortable with some unknowns and are willing and able to do some projects the home may require, consider a foreclosure.
My general advice is to focus on finding a home that meets your basic requirements that you love. Home ownership is a major investment of not just money but time, energy and life. A "good deal" in a house or location you are not happy with may turn into a nightmare. Good luck home buying.
I would say yes you can get a good deal, but do your homework. Make sure you find a Realtor that has worked with REO's, it is a totally different ballgame. You do not always know what you are getting and the bank will have no information nor responsibility for what you buy.