Buying Foreclosed Homes
Can you get a good deal buying a foreclosed property?
Yes, no and maybe. Remember, the lower the asking price, the more work the property may need. Most homes priced below other listings in an area may need work to make them livable. If the price seems like a steal of a deal, take a good look into the condition of the home in question.
You will want to look over any foreclosed home you are thinking of purchasing and hire a professional inspector. It is common to see appliances missing, carpet ruined from who knows what, terrible smell in the home, bug infestations, broken windows and stained ceilings. Large holes in sheetrock, light fixtures missing, even plumbing fixtures such as sinks and toilets have been removed. I was in a foreclosure once that they even took the Hot water heater, furnace/AC and the sliding glass door to the patio. If the homeowner had money to make repairs to the home they would have been making the mortgage payments and the home would not have gone into foreclosure.
How much are the banks discounting their foreclosed properties?
Even though the market has been slow, the banks are not discounting homes as much as some late night infomercials would have you believe. I work in my business full time and I see what the banks are selling these homes for. You will probably pay within 5%-20% of what homes in the surrounding neighborhood are selling for. Typically, a bank owned property will sell for 95% of the current list price. If you ask the banks to pay your closing costs; some banks will offer to pay 3% but some are not paying anything toward the buyers closing costs.
What if I have a home to sell before I buy?
Sorry, the banks will not accept contingency offers on foreclosed properties
I Am Ready to Start Viewing Homes With a Realtor
The first thing you need to do is to contact a lender and get pre-approved for a loan. Then you will know how much you can afford to spend on a home along with a pre-approval letter to provide to the bank when you submit your offer. The best deals are going to prepared buyers, the banks will not wait for buyers that are just “shopping around” hoping to find a good deal then trying to get approved . The pre-Approval letter shows your ability to get financing needed , sut it is not for a particular house. There is no cost for this, and does not obligate you in any way for a loan or to that lender. All it takes is a few minutes to call your lender, or one of these Local Lenders and have them sent it to my fax number 316-616-3875.
Foreclosure banks who hold the homes, will not even look at an offer from us without a pre-approval letter. This rule is made by the REO banks, but it does affect how I work. For this reason, I will only work with buyers who have their letter showing prof of funds if making a cash offer or a pr-approval letter if obtaining financing.
I Found Several Homes I would Like to Look At…
The best way to start is to drive by the homes of interest to you and narrow down down the homes which hold the most interest by what is most important to your personally. Approach foreclosed homes expecting the worst.
Many homes can be eliminated by driving by the home and checking out what you may or may not like about the conditions surrounding the home. Take into consideration your budget, how much do you have to invest for repairs on the home you choose? Some repairs may include replacing a missing AC unit , roof, paying for major exterior repairs such as damaged siding , rotten trim and soffits or broken windows. The electric , water or gas meters could be missing which may be a red flag for a major repair like the electrical wiring or electric panel needs to be replaced, broken water pipes or problems with gas lines or furnaces. If you are not willing and financially prepared to invest in the exterior repairs, we do not need to schedule an appointment to view the interior.