Home Buying in Springfield>Question Details

Macknkeagsmom, Home Buyer in Springfield, IL

What do I need to know before looking at foreclosed properties to buy?

Asked by Macknkeagsmom, Springfield, IL Mon Jul 25, 2011

I'm a first time home buyer and would like to buy the most house for the buck I can. I was thinking about looking at foreclosed homes hoping to get a great deal.

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Besides hiring a good Realtor, have an attorney to represent you on the offer, title work and closing. An attorney can pull a preliminary title report on the foreclosure and advise you as to the state of title. Attorneys in our area give seminars on foreclosures and have explained that a buyer should not assume that they will receive good, clean title on a foreclosure. There may be liens that were not foreclosed, which would become the responsibility of the buyer. A Realtor cannot give you legal advice, and you will need it if you plan to pursue foreclosed properties.

Best of luck.

Maripat Flood
Realtor
Michael Saunders & Company
Sarasota, Florida
941-320-0441
maripatflood@michaelsaunders.com
http://www.bestsarasotaproperty.com
http://www.michaelsaunders.com
1 vote Thank Flag Link Mon Jul 25, 2011
While foreclosed properties usually sell for less they often have suffered from neglect and are in need of repairs and updating. They are sold 'As Is". Make sure you understand the costs involved to do all the repairs and updating needed. Just because it is a foreclosure and appears to be a good deal, in the end it could be anything but. "Buyer Beware". Also consider FHA203k financing as you can include the costs of repairs and updating in your mortgage.
1 vote Thank Flag Link Mon Jul 25, 2011
Hello Macknkeagsmom. One good thing to know and understand is the type of Loan you are getting. Like Shanna stated, most foreclosures are sold "as is". So if you are getting an FHA loan it is important to know what is required to pass inspection at the home in order to get the loan. So if say there was old electrical that does not pass an FHA inspection, a lot of times a bank owned property will not repair these items.
However, if you are getting a conventional loan you should be able to move forward as long as the appraisal goes well. But either way 9 times out of 10 the bank won't repair any damages in the home.
If you want to start looking at Foreclosed homes in the Springfield area please let me know and I can help you out.
1 vote Thank Flag Link Mon Jul 25, 2011
Feel free to check out my blog. There is a lot of good first time buyer and foreclosure info which can give you some ideas and a place to start.
1 vote Thank Flag Link Mon Jul 25, 2011
Hi Macknkeagsmom,

First and foremost, hire a Realtor in your area. They will be able to assist you in all phases of the transaction and the seller pays their commission as stated in the MLS.

Most foreclosures/REOs are sold 'As Is' meaning the bank will not do ANY repairs. Make sure you do inspections (which you will have to pay for) once your offer is accepted but before the inspection contingencies are over (your Realtor will help you with this). Inspections are extremely important (especially with REOs) so you know before you close escrow if there are problems with the house.

Good luck!

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
1 vote Thank Flag Link Mon Jul 25, 2011
You can get a good deal with some forclosed houses, but you must also beware of potential hurdles. First, you need to have a preapproval letter from a lender of your choice. Every bankowned offer will require this letter. Second, you must be prepared to walk away from the deal if after conducting inpsections--and paying for them--you find problems you can't afford or simply don't want to undertake.
HUD homes are the best bang for your buck right now. Many are offering a special program for owner occupied properties...$100 down program.
Good luck!
0 votes Thank Flag Link Tue Aug 2, 2011
Hello!!
1. Find an experienced agent
2. Sit down with a lender and figure out what loan you qualify for.
3. Ask your lender what the condition of the properties has to be in for the loan you qualify for.
4. Once you have your lender pre approval letter get a hold of your agent to start touring properties.
5. Make sure you do the research on the community and the property. Ask your agent to help as well.

After you find a bank owned property make sure that you fully understand the process and what the bank may need once the offer is accepted. Ask your agent to find out what the earnest money amount will be, a copy of the bank addendums, will the bank make repairs if the appraisal has loan conditions, do you need to turn on utilities in your name?, how long is the bank giving you to complete your inspection, what happens if your home inspection shows major structural issues, etc. Those are just a few questions to find out. You won't have to worry about a thing if you work with an experienced agent. Ask your agent for testimonials and a resume!! Also keep in mind if you are only approved for an FHA loan the property has to be in good condition.
0 votes Thank Flag Link Sun Jul 31, 2011
Good Evening,

In my personal opinion, looking back on all the properties our firm, PahRoo Appraisal & Consultancy, has appraised in the past decade, as well as those properties which I've purchased (short sales, foreclosures, bank-owned, non-distressed sales, etc), I would highly suggest you do not purchase a foreclosure unless you are working with a talented and experienced Realtor with foreclosure experience. There are too many prospective problems you'll deal with, the biggest one being the as-is nature of the sale. At least with a short sale, you can see the house, see who is living there, see how the house looks with furniture in it and it doesn't necessarily have to be an as-is sale.

Granted, there is nothing wrong with foreclosure sales, but many times, you can get a short sale house for nearly the price of a foreclosure house and reduce your potential risks as a buyer.

Good luck,
you are on the right path!
Michael

Michael Hobbs
President
PahRoo Appraisal & Consultancy
Web Reference: http://www.pahroo.com
0 votes Thank Flag Link Sun Jul 31, 2011
if you need help call me i will be happy to assist and guide you or at least mail you some information .
Lisa Richter-Seiler
Curvey Real Estate
611 Springfield Rd
Taylorville, Il 62568
lisa@taylorvillehomes.com 217-820-2332 and yes I go to Sangamon County so yes I will help you.. Good Luck
0 votes Thank Flag Link Thu Jul 28, 2011
Contact your lending inst. or whomever you are going to go through to get the loan- Some First time buyers have a hard time getting funding to purchase foreclosures- and most are sold AS IS.. Meaning AS IS you are buying as it sits right now. You do have the right to turn electricity and water on to make sure no pipes are busted and everything works ok. And it generally takes 3 to 5 weeks for a response. best idea someone gave me who is a pro at this is- Ask if the bank is taking multiple offers if so going in with
1. Your bank approval attached to the contract showing you are approved to buy a foreclosed home or short sale make sure the bank or mortgage company has dated the letter within 30 days.
2. Don't loose your home if you really want it over 25.00 a month meaning a couple thousand more is only a few dollars more a month in payments.
3. Even though it is as is- take a inspector or contractor, electrician to see the home get an idea of what is will cost to repair and update. rather be safe than sorry....
4. Banks won't dicker around most of the time on a multi offer so.... Bit the bullet and go in with your best offer first.

AND ASK YOUR AGENT IF YOU INTEND TO FLIP what the guidelines are for flipping and 6 month or 1 year chain of title... meaning if you flip it you the buyers when you sell may have to have 2 appraisals done or maybe more. ask no such thing as a dumb question in real estate. Good Luck
Realtor Lisa
in Taylorville, Il
all info on file if needed name agent and office info license number.
0 votes Thank Flag Link Thu Jul 28, 2011
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