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What you need to know about buying a foreclosed home. . .


Let's get straight to the point, if you're planning on buying a foreclosed home you will first want to find a real estate broker who works directly with banks that own foreclosed properties.

By working with a real estate agent that handles REO properties or Real Estate Owned Properties, (owned by a bank) you can eliminate larger commissions that are split between brokers. You also increase your chance for a successful purchase by working directly with an agent that handles foreclosed homes. Why? Let's face it, while buying a foreclosed home may land you a house with fantastic pricing the process is not easy and you may have to put offers on several homes before you get the home that's right for you. Buying foreclosed homes can also be wrought with difficulties and hidden pitfalls that are often associated with distressed properties.

Working with the right real estate agent can also put you ahead of the game. It's a lot of hard work scouring the papers and internet for foreclosed homes. Many agents have good working relationships with banks that own distressed properties and have access to lists that not only show foreclosures currently on the market, but upcoming foreclosures that haven't quite been listed yet.

The second thing you will want to do is make sure that you either have the cash on hand to purchase a foreclosed home or are pre-approved by a lender to borrow the money. Really good deals go quick. If you're trying to work out financing after you've found a great property you're probably going to be out of luck. That also means that you can't expect the bank holding the foreclosed home to finance you. Foreclosures don't work that way. Financing a home and purchasing a foreclosed home are two separate issues, so again make sure you have your financing in place.

The Third thing you should be aware of is that foreclosed homes are sold as is. Like any home - have it inspected! Banks don't have to disclose damages and they may not even be aware of problems or damages such as mold or foundation issues. If there are problems don't expect a discount. Sold as is. Your real estate agent should be able to show you relative price comparisons for foreclosed home sales in the area.

The process of buying a foreclosed home can certainly be daunting, but the recent economic decline has created an opportunity for first time buyers to really capitalize on distressed sales.



Short Sales
Short Sale properties are homes that are potentially in distress, meaning either the seller is no longer able to make the mortgage payments and the home is in, or may be going into foreclosure, or possibly the seller is continuing to make the regular payments, but the value of the home is less than that of the current market value and the seller is in need of selling.

In order to purchase a short sale property. the seller will need to ask permission from the lender(s) and or investor(s) on the home to accept less money in the sale than what is actually owed on the home/property. The leinholder will need to be able to insure clear title to transfer to the new buyer. There is quite a bit of paperwork involved, but in most cases well worth the work if all parties are satisfied in the end.

This can be a great way to get a deal on a property, but the length of time it will take to close the deal could be extensive and there is no guarantee of you actually closing the transaction and moving forward with the purchase/sale. It is all up to the bank(s) lien holder(s) that hold the note. They have to be willing to take a loss. Also, there are some possible risks involved for the seller.

We are not attorney's or accountants, so we recommend that if you are planning to buy or sell a short sale property that you seek out legal advise and look into the whole process before you do. This is a great market for buyers, so watch the market closely, choose carefully, and have good representation from your friendly agent at Home Trend Real Estate, Inc.