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1650 RUSSELL LEE DR. |
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LOUISVILLE, KY 40211 |
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LP. $169,975 |
Status |
ACTIVE |
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1455
CYPRESS ST |
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LOUISVILLE, KY 40210 |
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3150
N. HWY 53 |
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LA
GRANGE, KY 40031 |
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LP. $475,000 |
Status |
ACTIVE |
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1115
WEEPING WILLOW |
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LA
GRANGE, KY 40031 |
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Finding Your Dream Foreclosure: What to Know
When You’re Buying an REO Property
By Amy Hoak
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RISMEDIA, October 5, 2009—(MarketWatch/MCT)—Buying
a foreclosure often is appealing to buyers
trying to stretch their dollars. It’s finding a
good one can that can be a challenge.
“The vast majority of the banks don’t want us to
advertise them as ‘bank-owned’ because it comes
with a negative connotation,” said Ryan Melvin,
co-owner of More Realty Group in Las Vegas. |
That means no sign on the front lawn
indicating the home is anything other than a traditional
sale. A buyer probably won’t find a property advertised
as a foreclosure on marketing materials, said Melvin,
who specializes in real-estate owned properties, or REOs,
those that have been reclaimed by a bank, typically
after an unsuccessful foreclosure auction.
Plus, in some markets, including Las Vegas, foreclosure
inventory is actually down compared with last year as
government programs attempt to keep owners in their
homes and banks aren’t putting as many homes on the
market, Melvin said. That’s making it harder for buyers
to snag a foreclosure, and those paying with cash often
win a bid over someone who needs financing.
If you’re considering the purchase of a home that is now
owned by a bank, it’s also important to know at the
outset just how much work you’re in for — and how much
it is going to cost you. Many foreclosures are in
various states of disrepair; some of the fixes are
cosmetic, but some can be extensive.
Those looking for the best deal probably shouldn’t rule
out non-foreclosure properties, either, said Mark
Goldman, a mortgage broker with Cobalt Financial Corp.,
and a real estate lecturer at San Diego State
University. Sometimes, people set their sights on
bank-owned properties “like the word ‘foreclosure’
equals ‘good deal,’” he said.
And that’s not always true.
One option for finding foreclosure listings: Go straight
to the bank.
Lender Web sites, such as those operated by Bank of
America, Chase and Citibank, will list the properties
the financial institution has reclaimed when borrowers
defaulted. To find a list, simply do a Web search for
REOs and the name of the lender. Contact information for
the property’s listing agents is usually provided for
each entry.
For a fee, other sites will hunt down properties for
you. RealtyTrac.com, which helps people find foreclosure
and pre-foreclosure properties, charges $49.95 a month,
after a free seven-day trial. The company also recently
launched BankHomesDirect.com, which charges $19.95 per
month and lets people search just for REOs.
Foreclosures.com charges $49.95 per month, after a free
seven-day trial.
Otherwise, you might want to enlist the help of a realty
agent. Someone who works regularly with REOs might be
able to track down the properties more easily than a
traditional agent. Melvin is a member of the National
REO Brokers Association, nrba.com, which has a
searchable database of brokers on its site. There’s also
the REO Network, reonetwork.com, which connects buyers
with those who specialize in selling REOs.
Lenders aren’t held to the same disclosure requirements
as sellers who have lived in the home, mainly because
the lender hasn’t occupied the home to notice leaks or
other problems. For that reason, an inspection is
crucial.
“If there are lessons out of the last couple of years,
it’s certainly buyer beware,” said Dan Steward,
president of the home inspection firm Pillar to Post,
which has a U.S. headquarters in Tampa, Fla.
“We have all heard the stories of people ripping the
copper pipe and wiring out … people have literally gone
to the light switch, disconnected the wire from the
switch box and have pulled the wire through the
drywall,” Steward said. Some have ripped out toilets and
kicked in walls or left water faucets running before
they left the house, often out of anger.
You don’t need to be told the toilet is gone, but an
inspector can tell if there is damage 20 feet down the
water line because of the way that toilet was ripped
out, he said.
Other issues could pop up due to the property being
vacant. Large banks will often hire a field service to
cut the grass, shovel the snow and winterize a home, yet
when homes aren’t occupied it’s harder to catch small
problems before they become big ones.
“When we live at home or drive the car, if something is
off we notice it. We notice it and we deal with it,”
Steward said. When a place is unoccupied, pests could
become an issue. If you were living in a home, a nest of
raccoons probably wouldn’t be able to find a home in
your crawlspace—not for long, anyway.
A neighborhood environmental report might also be
worthwhile, he said, which could reveal if the property
was the site of a drug lab, for example. When a meth lab
is operating in a home, air quality issues can arise;
when a home was used for growing marijuana, there is a
tendency for mold problems from the high humidity,
Steward said.
The time it takes to complete the sale can vary from
lender to lender. In some cases, the process goes
smoothly, Goldman said. Other lenders are disorganized.
“It really depends on who you’re doing business with,”
Goldman said.
But for your best chance at having an offer accepted and
for a quick closing process, have everything in order
before making the offer, said Duane Andrews, CEO of
Clear Capital, a company that provides valuation
products for the mortgage and lending industries. That
includes having the financing firmed up and writing a
clean offer — for example, asking for new oven racks as
part of the deal could peg you as a demanding buyer who
will be annoying to deal with, he said.
“What this tells the seller is this guy is going to be a
pain and they don’t have time for this pain,” Andrews
said.
In fact, most bank-owned properties are sold “as is,” so
if there is something you want fixed, it’s best to just
factor that into the price you’re offering, Melvin said.
But don’t expect to bargain the listing price way down,
Melvin added.
Banks typically price their properties at a 20 percent
to 30 percent discount anyway, he said. If the property
has been on the market for a week or two, don’t expect
the bank to drop the price; if the listing is older, you
might have more power, he said.
Also, don’t be surprised if the bank that is selling the
property asks you to get an approval from its mortgage
operation; you often don’t have to take the loan from
their company, but they may want to get a closer look at
your finances to make sure you’re a solid buyer, Melvin
said.
Above all, make sure to follow directions when
submitting the offer, he said. That likely includes
having an approval letter from the bank and the correct
amount of earnest money.
“Most listing agents will have instructions how we want
buyers agents to submit the offer,” he said. Delays can
occur when instructions aren’t followed exactly.
(c) 2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services. |
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start searching for your NEW HOME!!!
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George
Blissett, REALTORS®, eRES, FTHBD, SRIS, SNCS,
SRS, MSS
Semonin REALTORS, 4967 US Hwy 42, Suite
100,
Louisville, KY 40222
Phone: 502.329.5268 Toll Free:
1.800.626.2390
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rights reserved.
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