Posted by Elizabeth Dennis on October 4, 2011 | No Comments
Buying a foreclosed home is slightly different from purchasing a regular house. However, it can be worth it for the cheaper price if you don’t mind doing a little extra home repair and having to do a little more research.
One of the first steps in purchasing a foreclosed home it to get preapproved for a mortgage. Many buyers believe they can find the home they want and then arrange the financing, but with a really good deal, the house may not last long enough on the market for payments to be arranged. This preapproval letter will describe how much money you can borrow based on several factors including credit score and income. You will then also be in a much better position to buy because you will know exactly how much you have to spend.
The second step in buying a foreclosed home is to find a broker who specializes in foreclosure sales. Most of the time a buyer can turn to a bank for help in this process. Many lending institutions have one or more brokers whose job is to move the property. An advantage to this situation is that they agent will know exactly what is on the market plus which houses are about to be available. In some places, such as Las Vegas which has a glut of foreclosures on the market, you may not get one on one service, but this is still the way to go.
Next, be sure to study the prices of comparable homes in the market. Be sure to write a competitive offer based on the prices of other homes in the immediate vicinity and those with a similar design and layout. There is really no room for negotiation so make sure that you are offering a price that you can live with and afford.
Keep in mind that when purchasing a bank foreclosure it is going to be sold as is. Therefore, buyers cannot expect to get a discount when it comes to any repairs that must be made. Repairs are almost inevitable when it comes to foreclosed homes so make sure you know people who can assess the damage and let you know how much it will cost to take care of any issues. Be sure to check out any drainage issues or foundation problems and anything else that may crop up.
Overall, buying a foreclosed house is very safe as long as you do your homework before hand. Another important thing to consider is to make sure that title insurance is available on the property. This will come in particularly handy if a house has been wrongly repossessed. As long as the new lender and new owner have title insurance, the former owner can’t get back into the house. If this should happen, the new owner will keep the house while the old one will be compensated with cash. Also, stay away from foreclosure auctions and try to buy directly from the bank that seized the property to make the process more hassle free.
Posted by Elizabeth Dennis on September 27, 2011 | No Comments
If you are in the market for a home, you have more than likely run across a house or two that is being listed as a short sale. A short sale is when the owner is upside down in his or her mortgage and is looking to negotiate with the lender in order to avoid foreclosure. With a short sale, the bank which is also the lender, agrees to accept less money than what is owed on the mortgage. This works out for the bank and the seller. With a short sale, the bank won’t have to repossess the home and go through and expensive and time consuming process and the seller will be able to avoid the credit hit that comes with a foreclosure.
When buying a house that is on a short sale, there are certain things a buyer should know. First, the buyer should get an agent who is familiar with dealing in short sales. An agent with experience in this field will be able to expertly guide you through the transaction and protect the buyer at the same time.
In many ways, buying a short sale property is not all that different from a traditional purchase. However, the buyer must be prepared to enter a waiting game with the bank and come with a large amount of patience. There are a few other differences as well such as the terms of the sale will be subject to the mortgage lender’s approval. Whereas, in a normal transaction, the only party who has to approve the sale is the seller.
Buyers in a short sale should also be aware that the house is going to be sold as is. This means that the buyer will not be able to expect that the price will be lowered if there are any problems found within the house.
When making an offer on a short sale, be prepared to wait. Many banks could take up to several months before even responding to short sale offers. Some experts say that the potential buyer should even give the lender a deadline to reduce the waiting time, however, there is no guarantee that the bank will adhere to any deadlines set forth. One reason for the wait is that the bank may hope that they can get more money. The seller may also hope for more money in a sale as well because they are normally responsible for the difference between the sale price and the amount left on the mortgage.
One advantage to purchasing a short sale house over a foreclosure is the house is usually in much better condition than those that are in foreclosure. This is because the current owners are still in the home where in the case of a foreclosure some owners will trash the house as a way to get back at the lender.
Next, when looking at a short sale, it is generally advisable to keep looking at other houses. This is because of the wait time associated with a short sale.
Finally, do your research and make sure that the current owner is in default. In addition, check to see if a foreclosure has been filed in order to better determine how much you want to offer.
Posted by Elizabeth Dennis on September 19, 2011 | No Comments
After you have found the house of your dreams, it is time to make an offer. This is usually where a realtor comes in as they can be helpful in negotiating as well as having all the proper forms on hand that need to be filled out. Remember that when you make an offer, it needs to be done so in writing so it can be legally enforceable. Also, remember that if a seller accepts a bid, you are bound to the agreement so don’t make an offer unless you are serious about purchasing the house or condo.
When you make an offer, it needs to contain other information in addition to the price that you are willing to pay. It must also include any terms such as if the seller is willing to pay any closing costs. It should also provide a target date for closing, the amount of earnest money that is to be deposited, how the real estate taxes and other bills are to be adjusted between the buyer and seller, provisions as to who will pay for title insurance and survey and a time limit after which the offer is no longer valid.
An offer on a house should also make clear and contingencies. These are such things that say the offer is only contingent upon other events. These other events can be such things as the buyer selling their house in order to have the funds to purchase a new one or the buyer being able to obtain specific financing. If these things do not happen, then the buyer won’t be bound by the contract. Another popular contingency is a satisfactory report by the home inspector. For example, the seller must wait a certain amount of days to make sure the inspector submits a report that the buyer can live with.
When you submit an offer, be sure to do so with plenty of room for negotiations. You will find yourself in a strong position if you are an all-cash buyer, have already been pre-approved for a mortgage or don’t have a home that has to be sold before you can purchase a new one. Also, check to see why the seller is getting rid of the house. It may be that the house is vacant and eating up money each month. Or the seller could be in the middle of a divorce and wants out as quickly as possible. All of these factors work in the buyer’s favor as you may be able to make an offer much lower than the asking price and have it accepted.
Upon making an offer, it becomes binding if the seller signs and acceptance just as it stands. However, the seller may want to make some changes and at that point, the buyer receives a counteroffer. The buyer can then reject or accept the counter or make a counter to your offer. Any time there is a change in terms; either side can accept or reject it. You can even take back an offer up until the point that it has been accepted and you have gotten notice of that acceptance.
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