Foreclosures?

Question

In the next few months my wife and I will be on the market to buy our first home. In the mean time, I want to educate myself on the process, what to look for and what to watch out for.

We've been looking at foreclosed on homes and they look like a steal. This has gotten my spidey-sense tingling though, since if it looks too good to be true, it usually is.

So what's the deal with Foreclosures? Also, where can I go for the 411 on buying a new home?

Answer 1

While foreclosures may appear to be great deals, they come with alot of baggage too, if you know what I mean. This kind of property isn't for the faint of heart. But if you educate yourself and understand how things basically work, then you should avoid a disastrous purchase.  First thing is no matter what you select to purchase, have a whole house inspection, even new construction! It is money well spent.  

Foreclosures, typically are in marginal to bad condition.  A good inspector can save you from making a mistake. Most need basic maintenance, probably all new flooring, new appliances etc. If they couldn't pay the mortgage the chances are they didn't take care of anything else.  Now you could consider an FHA 203K type of loan, which gives you some money (escrowed) to fix up a home.  What you might consider really looking at are "short sales". These are homes the owner is still living in for the most part and are livable. Some can be pretty bad, but for the most part in average condition.  Of course you can elect not to look at either of these types of properties.

Not sure what you mean by "411". But any Realtor worth their weight can help you with the whole process, including buying foreclosures.  I would simple make a list of the things you have to have and a list of the things you would like to have. Give it to your Realtor and you're on your way to homeownership.  Good Luck and thanks for being in the market!

Answer 2

Two great sources of info for buying a home: Google “First time home buyer” and locate a buyer’s agent.

Foreclosed homes can be in virtually the same condition as other homes in the area or they can be in various states of disrepair. They may or may not be priced below other homes in the area. There’s a wide range.

I think it’s foolish to only search for foreclosed homes. Depending on the home’s condition, there can be basically no price difference between buying a bank or a privately owned home.  One big difference though, is that if you’re buying from a bank, you can be 98% certain they won’t make a single repair. Unless the private owner is selling as-is, you have a chance that they will be willing to make repairs based on your inspection.

Under ALL circumstances, though, your buyer’s agent should submit any offers contingent on a home inspection. If the home is being sold as-is, your inspection is just your way out if you find you’re not willing or able to fix all of its issues.

If you see a home at a “bargain” price, there is absolutely a reason for it. A bank wants to make as much as possible for their properties. They only give them away when they have to.

I’ll suggest you do what I did. Talk to a lender and find out how much you can borrow. Sit down and figure out how much you are comfortable spending (ex. my “comfortable” expense was about 15-20% less than I was approved for). Then get with your buyer’s agent and have them show you all of the homes that meet your criteria. It just might work out that it’s a foreclosed home or it might not be. Just don’t limit your options.

Answer 3

Anyone would be CRAZY to purchase a home that wasn't foreclosed!!!

My husband and I are both looking, as well.  We contacted a mortgage company and based on our credit and debt, they said they could loan us up to 100K.  In my mind, I thought this was not enough to purchase a nice home.  WRONG.  When I started looking online, I saw all these beautiful well-kept homes being sold for 80K and under.  Some even were going for under 20K.  I called him back immediately and asked what the heck was going on.  I knew something had to be wrong with them.  He said what's going on is that people lost their homes because they had adustable rate mortgages and could not keep up the payments once the rates went up.  These were just regular people like you and me who got in over their heads.  So, now the bank has bought back the home and in most cases, just wants what's owed on the mortgage or even less.

So, we are DEFINITELY getting a foreclosed home. No other way to go.  My lender said that, let's say, the house cost 50K but needs 10K worth of repairs.  They would pay for the home (and in many cases tack on any closing costs to the price of the home so you don't have to come out of your pocket) and put the rest in escrow for repairs, property taxes and insurance.  If you don't have a down payment and you're getting an FHA loan, you can ask for what's called down payment assistance which is a government grant that can pay your down payment for you.

Bottom line: ONLY GET A FIXED MORTGAGE.  Other than that, the world is your oyster. There are so many beautiful homes to choose from.  Nowadays, you can get a 200K home for 100K!

Keep in mind of property taxes, though. Research the different millage rates in the cities you're thinking about moving to because there may be huge differences and property taxes affect your mortgage payment if you choose to pay them through the escrow account.  

Also, good schools is paramount, as well.

Answer 4

Look through the listing in your area real estate agents who are specialized in foreclosed / short sales.

Have your pre-approved bank loan in hand; and go for it.

Don't worry about the cosmetic part, dirty carpet, holes in the walls because the owners have been angry; those can be new for less than $10,000.

Look for the neighborhood, the lot size, the pollution around, then closing in the foundation + roof + sewage draining freely? + plumbing + mechanicals + the lay out /style you like or you can remodel for certain dollars (say $200/square foot max.)

Then do deal.

Be nice to the sellers; let your agent do the dirty works for you and have her/him only take 2% or 5%, commission giving you 1% for new appliances + fixtures + new locks + camera security system.

Answer 5

I may not be the right person to answer this, but at http://www.homelandassistance.com they can help you.

Answer 6

When buying a for-closed home, what you see is what you get! no guarantees. You might get a lower price, but beware and be ready to fix any problems that come up. With buying a home from a person with a real estate company you can get a warranty and the seller is supposed to tell you if there are any serious problems. If they don't say and you find trouble you can go against the seller.

Answer 7

I suggest that you find a good Realtor to work with.  They can give you all the information that you need on buying a foreclosure or a new build home.  Good luck in  your house hunting.