need help buying forclosure homes?

Question

My fiance and I are looking to buy our first home. We live in an area where homes are really expensive so we'd like to try buying a forclosure. We've found a couple online but we're not too sure about what exactly what they mean. One listing we like says it's Real Estate Owned and in the final step of the forclosure process. The ownership has reverted to the lender. It has an estimated sale price listed that fits our budget.

What I was wondering was is there anything else we should know before we decide to move forward with this? Does this seem like a good idea or is it too good to be true?

Thank you!

Answer 1

REO (real estate owned) can be a great investment. Be sure to bear in mind that most are "as is". and fixer uppers at that. I handle all the financing for a company that services and sells these properties. If you like, I can put you in touch with one of my agents and they can help you find the right place. email me through this site.

Answer 2

There may be a redemption period that has not expired on this home, so bear that in mind when you are considering the status of the property.

The problem I have been hearing lately about REO properties from buyers:

The offer has to be no contingencies, some lenders won't even allow an inspection contingency.

The offer gets submitted, and you wait. And wait. Sometimes you get an answer, sometimes you don't. An offer can be accepted and subsequently rejected with no explanation.

And these things don't seem to move quickly. I know one couple holding onto hope for a house they bid on 3 months ago. Still no sign from the lender if they are going to get it or not. They have not accepted or rejected their offer and the Realtor won't give them a timeline when they will hear anything.

And condition is a huge issue on these properties. Obviously people are moving against their will. I have heard about properties that have the wiring and plumbing ripped out, doors and frames gone, windows taken, holes punched and kicked into the walls, bathroom fixtures destroyed. Some people are really angry about losing their homes and took this out on the home.

But I have also heard there are some great REO buys out there, if you can wait out the process. It would seem REOs are more tailored to investors, who don't have to give notice to a landlord or don't have to plan their home sale around this purchase.

Answer 3

REO's or foreclosed homes can be a great bargain, if you are educated about the market and the homes current value. Around the US, the number of foreclosed homes is on the increase and can often be purchased for 50 to 70 cents on the dollar. But, keep in mind, buying a foreclosed can have pitfalls. Many times the former owners not only failed to keep up the payments, but the maintenance as well. Make sure you get a qualified and reputable home inspector to check it out first. You can make an offer subject to viewing the results of a successful private inspection. Hire a knowledgable buyer's agent to represent you. You can even ask the seller (the bank in this case) to pay a portion or even all closing costs. Many banks will even pay for a home warranty or make repairs if agreed to upfront to ensure a sale. Some banks will even waive your closing costs, and give you a reduced interest rate if you finance the home with them.

Answer 4

You and your fiance should find a house that you can afford in the area where you want to live, whether it is a foreclosure, short-sale, estate sale, motivated buyer, distressed property, or just a once-in-a-lifetime great deal.

It sounds like the first step is for you to get an agent. Your questions make me believe that you couild end up in trouble going alone.

Buying foreclosures can be very tricky, and as those above said, you have to be patient. Banks are not necessarily quick to respond to offers. They make you agree to a ton of contigencies and jump through lots of hoops. And they may not be a bargain because of the condition. Your agent will do the comps to make sure that you are paying a fair price.

Good luck, whatever you decide to do!

Answer 5

REO and HUD homes can be a good buy, but don't expect any bargains. They are cheap because of reasons. Banks, HUD and others attempt to get as close to retail price as possible allowing for repairs, etc. This is not a good avenue for beginners. You can usually get a better deal by attending foreclosure auctions, but the pitfalls are greater there because you usually don't get to see the interior and that can mean some really nasty surprises ahead.

None of the above are good for a beginner.

Keep in mind that if it is a really good deal, some investor would already be on it.

Remember, if it sounds too good to be true, it probably is.
This pertains to real estate as well as anything else.

But, if you don't mind a lot of dirty work and have experience working on homes, you might want to consider it.

Answer 6

First off, you need to check the premises carefully, with a professional inspection. Foreclosed homes are sold 'as is' in most cases, and some of them are not in the best of condition. You may find that the attractive price reflects repairs which need to be done.

The worst scenarios I have encountered include missing exterior doors, plumbing fixtures, kitchen cabinets, appliances, and so on. Some former owners simply take with them anything they can manage to remove.

Once you have done a walk through of the premises, determine what it will cost to bring the property back into good condition. If those costs added to the offered purchase price match other sales in the area, you aren't gaining anything.

Answer 7

It would've been a lot heck of a better deal if you knew of it at the prepreforeclosure or preforeclosure stage, but it still could be a very good deal provided that you get to inspect the property before committing to it and talk with your mortgage broker for further advice.