Home > Buyers, Finance > Buying a Foreclosure – what you need to know

Buying a Foreclosure – what you need to know

Foreclosures can be exciting. In some markets, they are not only plentiful but they sell at steep discounts, too.  I conducted a search in our MLS of our core local market (Wasilla, Palmer, Meadow Lakes, Big Lake, Houston area) and found foreclosures only count for approximately  5% of the active residential homes.  Although a handful of these homes are priced well below market others seem to be right on par with the market.

But just because a foreclosed property maybe a “deal”, it doesn’t mean you should rush to buy it. Buying a bank-owned REO is a different process frought with different risks as compared to buying a non-foreclosed home from a “person”. With foreclosures, the contracts are different, the negotiations are different, and you’re often buying a home as-is.

“As-is” is foreclosure-speak for “this home may have defects and needing repair.”  If you are purchasing a home with a loan your loan program may require those repairs to be made before the bank will lend you money.   The sticky situation here is the institution owning the property doesn’t typically want to make the repairs (that’s why they are selling it “as is”), the institution owning the property doesn’t want to you to make the repairs for liability reasons, and you don’t have 100% loan commitment from your bank – meaning, you may make the repairs and still not get the house or reimbursed .

Therefore, before writing a contract, make sure to know what you’re buying and — if you need a mortgage — be absolutely certain the home can be financed. Certain defects can render a home unlendable for FHA mortgage programs and via conventional financing, too.

Buyers of foreclosed homes get the same mortgage rates as everyone else so make sure buying a foreclosure is the route you want to take.

 

Still interested in foreclosed homes?  Contact Team Rogers today and we will get you started with a list of available homes!

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