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Buying a Foreclosure
So you want to get in on the bargains found in today's market? There are
many good deals to be had. Recent fall out over poor lending practices has
created many opportunities to find a great deal. But, are you ready for the
challenge that comes with purchasing a bank involved property?
Foreclosure vs. Pre-Foreclosure
Foreclosures are properties that are owned by the bank due to
the borrower defaulting on their mortgage. Pre-Foreclosures are
properties where the owner is behind in their mortgage payments
and needs to sell. Often this includes a Short Sale. A Short
Sale means the property will sell for less than what the owner
owes the bank.
Pre-foreclosures are the most difficult purchases for a Buyer.
They require the current lenders who hold mortgage to the
property to approve the sale price. Often there may be more than
one lender involved (Primary loan - Home equity loan- etc). Once
you make an offer on a Pre-Foreclosure/Short Sale, you will
negotiate the sale price with the Seller. If the Seller accepts
your offer, then the Bank(s) will review and decide if they will
accept your offer. This may take a few days or several weeks.
Typically, at this point in the Foreclosure process, Banks are
not very negotiable.
Much Easier and often a
better deal are Foreclosures. These are also known as REO
properties [Real Estate Owned]. These properties are owned
outright by the lender. When you make an offer on a Foreclosure
property, it goes directly to the lender for approval. Often a
response is received in 1-2 business days. Depending on the
terms and price of your offer, the lender may accept or counter
offer. Often, once banks actually own the property they
tend to be very negotiable in a effort to remove the property
from their inventory.
What kind of condition
are these homes in?
Today we see a wide range of conditions when considering a
Foreclosure property. Some will need a complete overhaul from
roof to electrical resulting from years of neglect. Others have
already been updated. Some properties have been damaged in the
process of the previous owner leaving. Each property is
different. The more repair and remodeling skills you have, the
better bargain you will find.
Who pays for the
repairs?
The new owner. You will be responsible for making the repairs on
your own. Depending on the condition and the type of loan you
are qualified for, a property needing major repairs may not be
right for you. Traditional conventional financing often does not
allow for properties needing roofing, cabinetry or mold
remediation. A property only needing cosmetic updates may be
better for you. Our consultants can advise on what type of
foreclosure property and loan package will be best for your
needs.
Making the offer
Today lenders are holding many of these foreclosure properties
in their inventory. They are often eager to accept an offer that
minimizes their losses. When making an offer terms such as type
of financing, down payment, closing date, etc as just as
important to the lender as the offer price. It is crucial you
have all the information and documentation you need when
presenting an offer. Your consultant will work closely with your
lender to prepare the offer package that will secure the
property of your choice.
How do I find
Foreclosure Properties?
We can help. Give us a call and we can sit down and devise a
plan that will best suite your needs and time line. Our
consultants will discuss your goals, your needs and your
financial picture and find you the right property.
Bottom Line
Foreclosure properties can be a way to find your dream home at a
great price. But the process may not be easy. We can take some
of the stress out of the buying process and get you into that
sweet deal. Call us today to discuss with our consultants how we
can help you buy a foreclosure property.
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