According to the National Association of Realtors, foreclosures and short sales accounted for one third of home sales in May 2009.
Buying a foreclosed home is a little different from buying a typical resale home.
- In many cases only one real estate agent is involved.
- The seller wants a preapproved letter from the lender before accepting an offer.
- There is often little, if any, room to negotiate.
- The homes come “as is”, and it’s up to the buyer to pay for repairs.
On the upside, most bank owned homes are vacant, which can speed up the process of moving in.
Buying a foreclosure can be a grind. You get a good price but sometimes you have to go through a lot of houses and write a lot of offers to get the house you want.
One third of May 2009 sales were distressed properties, foreclosures and short sales. A short sale happens when the lender agrees to let the owner sell the house for less than the amount owed because the owner cannot afford the monthly payments. Many of these distressed sales went to first time buyers who are concentrated in the lower price ranges.
5 Steps to Buying a Distressed Property:
1. Get preapproved for a mortgage
2. Find an agent specializing in foreclosures
3. Know how long it takes to sell a home in your price bracket
4. Study the sale prices of comparable homes in your area
5. Remember the sale is for the home ” as is”
The first two steps in buying a foreclosure should happen almost simultaneously; find a real estate agent that works directly with banks that own foreclosed homes and get a pre-approval from a lender.
Foreclosure shoppers should find a web site that lists local foreclosures or call local banks for their list of foreclosures and short sales. The goal of combing through foreclosure listings is not to find a house; it’s to find a real estate agent. Banks usually hire one or several agents to handle their real estate owned properties in a market. In most cases the buyer works directly with the banks agent instead of a buyer’s agent.
More to follow…
