Bargain hunters and first-time home buyers alike almost
always have questions about the value of buying foreclosed homes.
Amanda Howard Real Estate has access to listings of foreclosed homes
being sold at prices that are extremely competitive in today’s
housing market. When realtors show potential buyers foreclosed properties,
they should make every effort to convey the difficulties that a new
home owner may experience once the sale is complete. If you are considering
the purchase of a foreclosure property that may be too large of a
commitment for your lifestyle, your Buyer Specialist
will be honest and share his or her concerns with you. This is because
good realtors want their clients to be happy with their purchase,
and therefore try to ensure that each client is making the best decision
for his or her particular circumstances.
Logistically, the process of searching for a foreclosed
home is very similar to that for any other home. Specific listing
services provide information to potential buyers, and we receive additional
information that they can shared with potential buyers. Potential
buyers usually want more information about foreclosed homes than what
is available. Understand that when you seek information about a home
being sold through a foreclosure sale service, your Buyer Specialist
will probably need additional time to find the answers you need.
A foreclosure is almost always a home that was purchased
by a buyer with a federally insured mortgage. The buyer then defaulted
on the loan and the home went into foreclosure. Because the borrower’s
mortgage was federally insured, the insuring agency was required to
satisfy the remaining balance of the loan, in essence buying the home
from the lender. Obviously, the government does
not want or need this surplus property. Therefore, the government
usually sells the property to a company which specializes in the sale
of foreclosed properties. These agencies are located across the country
and list thousands of homes for sale.
Some of the higher-quality homes in affluent areas
are sold immediately, perhaps even before they are officially listed
for sale. This leaves average home buyers with opportunities to save
a significant amount of money if and when they find a home that works
well for their current situation. Many foreclosed homes have been
vacant for a long time before the listing agency places them on the
market for sale. The risk of problems arising from that vacancy may
leave buyers disillusioned when they finally have a chance to visit
the homes they are considering. Also, in some foreclosure situation,
the previous borrower may not have maintained the home adequately
and there may be missing or damaged items throughout the home. Sometimes
foreclosure homes are referred to as buyer beware, because these homes
are almost always sold as-is.
Here are the three most popular
questions that Amanda Howard is asked about foreclosed properties:
How Can I Find a List of Foreclosures?
Stay away from companies that promise to provide you with a list of
homes that you can purchase for pennies on the dollar. These companies
have been known to provide sellers with lists of homes that have already
sold, or lists of homes that are already available for free through
us. This site is a good place to begin your search. Most of the reputable
agencies place their listings of foreclosed properties in the MLS
and this site gives full access to those listings.
If you want to know whether additional foreclosed
homes are for sale in your area, contact one of our buyer
specialists. We maintain a list of foreclosed properties, and
a buyer specialist will be more than
happy to meet with you to discuss the possibilities.
So, Do I get pre-approved for a regular mortgage?
Or Am I Required to Pay Cash?
A common misunderstanding among potential buyers is that unless they
are prepared to pay cash on the spot, they cannot purchase a foreclosed
home. This is simply not true. Some lenders offer special loan programs
aimed at borrowers who intend to buy a foreclosed home.
Lender appraisals and inspections may sometimes make
it difficult to obtain a mortgage for a foreclosed home that has been
damaged or is in need of significant repair. Consequently, the same
federal agencies that put the homes up for sale may be willing to
extend financing to potential buyers. These agencies will sometimes
give the buyer grant money or a low-cost second mortgage loan to be
used for the repair of the home.
In sum, you do not need to pay cash. However, you
may need to borrow a specific type of mortgage loan, depending on
the home’s condition and price. Contact a Buyer
Specialist at Amanda Howard Real Estate and they can help guide
you to local lenders that have loan programs to match your particular
needs.
Will I Save a Lot by Buying a Foreclosed Home?
Another common misconception is that foreclosed homes are priced at
pennies on the dollar. Well, if you consider this phrase to mean 99
pennies on the dollar, then you may be correct. Generally, foreclosed
homes are listed for sale at their approximate market value, according
to the home’s location and condition.
Some foreclosed homes sell for very low prices, but
in most of those cases the homes were razed in order to make room
for new construction. More commonly, high-priced homes in affluent
areas sell for a few percentage points less than their current market
value. If this is the type of deal that you are looking for, then
definitely consider purchasing a foreclosed home.
Our buyer specialists
will warn you up-front that the costs associated with buying a foreclosed
home can be significant. The buyer may be required to perform very
costly repairs before occupying the property. Also, these buyers may
be unable to take advantage of low interest-rate specials offered
by lenders.
If you are considering the purchase of a foreclosure,
be realistic in your expectations and prepare to expect the unexpected.
Many buyers are thrilled with their home after purchase, but others
are forced to complete months of costly repair work before they can
move in. As long as you investigate the possible options, including
the available mortgage and assistance programs, you will be an educated
consumer prepared to make an educated purchase. Buying a home is often
the largest investment that you will ever make, so you need to feel
secure in the knowledge that you have invested wisely.
