Is it easy to purchase a foreclosed bank owned home? If so how do I get started?

Asked by bfleming200, Auburn Hills, MI Tue May 14, 2013

first time home buyer

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Kathy Persha, Agent, Birmingham, MI
Tue May 14, 2013
What makes buying a foreclosed bank owned home difficult is the number of people who are bidding on them. Because there is such a shortage of houses on the market and there are so many buyers, there just aren't enough homes for everyone. As a result, buyers are bidding higher on many of the houses than what the house is listed for.

One of the other answers indicated that foreclosures are someone else's headache. Sometimes that is true but I have been in plenty of foreclosed properties that are in great shape and are a great deal. If you are working with a knowledgeable agent who can screen the properties to meet your criteria and who can advise you on some of the little tricks that can get your offer accepted, you can get a fantastic house for a great price.

And you do have an advantage over other bidders. The banks prefer to sell to an owner occupant over an investor. I've looked at plenty of foreclosed homes and have bought several myself.

To get started, you need to have a great mortgage person who can get you pre-approved. In order to bid on a house, you must have your pre-approval letter. And that also lets the agent that you are working with know how much house you can afford. If you do not have a lender, an agent can make a recommendation to you and help you start that process. Once you determine what price range you can qualify for, an agent can start searching in the area where you want to purchase. If you need additional help of information, feel free to contact me. And whether you call me or someone else, good luck to you in your home search.

Kathy Persha, Assoc. Broker
Nextage Advanced Realty
1 vote
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Tue May 14, 2013
Good afternoon bfleming200,

I've been helping First Time Buyers for 23 years as a mortgage professional and I will tell you what I have always told my clients here in New York: If you are a First Time Buyer, steer clear of foreclosures and short sales.

Foreclosures are someone else's headache. The home probably has not been well-maintained and you're a First Time Buyer adjusting to paying a mortgage. Do you really want to walk in the door to someone else's deferred maintenance that YOU will have to pay for? Also, if you're thinking there are deals to be had in terms of lower prices, mostly those "deals" go to professional investors who can pay cash, negotiate hard with a Lender, and close fast.

For Short Sales, my attitude of late is that First Time Buyers should steer clear. Short Sales tend to be a better deal for the homeowner than for the Buyer. You'll wait MONTHS for the homeowner's Lender to approve the short sale; maybe as long as Six or Seven Months. Meanwhile, you're stuck in a contract to buy that home. I closed a short sale recently with a Buyer who, after seven months said this at the closing table, "I don't even want this house anymore."

And he didn't even get the "deal" on price he thought he was getting! The house appraised for only slightly more than he paid for it at the short sale price. He walked into this deal thinking he was buying a home for $100,000 less than it's value. In the end that wasn't the case.

There are plenty of motivated Sellers with their homes listed on your local MLS. Go find a good Local Mortgage Banker, get prequalified, then find a great, experienced Realtor, and buy the home you want at the price you're willing to pay.

Trevor Curran
NMLS #40140

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1 vote
Margo Borkin, Agent, West Bloomfield, MI
Tue May 14, 2013
I have to disagree with Mr. Curran below. There is no reason to steer clear of foreclosures or short sales. We specialize in short sales and foreclosure and for the most part they are exactly the same as traditional sales.

Is there a reason you specifically want a foreclosure? There is a common misconception that foreclosures are going to be a "steal", which isn't really true. Foreclosures are appraised and sold at fair market value just like traditional homes. If the home needs a lot of work, it will be priced accordingly. If the home is in great shape, same thing. So you don't want to limit yourself. When we set up a buyer with a search, we send you everything!

Transaction wise, Foreclosures, Short Sales, and Traditional sales all work the same. You write an offer that hopefully gets accepted. You do a private inspection to make sure there are no hidden defects. And then you close!! Short sales take a little bit longer to complete, but as of recent they have really sped up!

If you want to buy a home, your first step is to get a buyers agent. They can explain all of this plus some, set you up with a property search, and help you through the whole process!
0 votes
Karen Paytas, Agent, Clinton Twp, MI
Tue May 14, 2013
Good Afternoon!

First of all if you're financing you'll need to get a pre-approval from a lender. I would also suggest contacting a buyers agent they will be able to refer you to a lender if you don't have one.

If you need the assistance of a buyers agent I would be happy to help.

Good Luck,

Karen Paytas, GRI, CMS
Real Living Kee Realty
0 votes
Pete Maver, Agent, Birmingham, MI
Tue May 14, 2013
Your best bet is to work with a realtor...we have access to what is on market in terms of bank/other properties. Doesn't cost you anything to have realtor working as your buyers agent....happy to discuss further....Pete Maver...National Realty Centers...248.705.2753
0 votes
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