One of my most frequently asked questions: Do you have a list of Foreclosures?
One of my most frequently asked Questions:
Do you have a list of foreclosures?
This is a seemingly normal and reasonable question on the surface. However, what they are really asking is: Where are the cheaper homes?
I don't blame them. In our area, the entry level home price is above $500,000. That is a lot of money.
However, because of this, we don't have 'foreclosure lists' like large cities would. We do get our share of distressed properties, but not nearly enough to put on a list. And even when we did, they were sold so quickly that it would have been a waste of trees to print it out.
The fact is, that in an area where the desirability and prices are high, banks have learned that listing a distressed property with an agent is to their advantage. So, instead of properties selling at the courthouse steps many foreclosures are resold using agents, just like a non-distressed property.
This doesn't mean you won't catch a property going to foreclosure, but, it does mean that you aren't likely to find the super cheap homes you're looking for on some list.
Once a property is listed with an agent, it is put on the open market at market value. In our area, market value can be expensive and is not going to be the good 'deal' that people are looking for. Many times homes that are foreclosed are in poor condition. This leads to their prices being lucrative. However, if you don't have the money to fix it up or it's condition is so bad it is
un-lendable, purchasing it becomes impossible without lots of cash.
un-lendable, purchasing it becomes impossible without lots of cash.
Your best bet is to follow the market of the area you are interested in and keep a close eye on it. It requires lots of patience but it could pay off. Read the classified sections of the paper, look for the notices to creditors, even attend court house auctions of homes in foreclosure. This will give you a good idea of the process. During the process of watching the market you may find that you are able to identify properties that are 'good deals' not only at auction or in distress but also in your local realtor's office.
Remember: Just because it's in distress doesn't mean it's a good deal. One more thing distress properties usually need is Cash. Many properties in distress may not qualify for a loan, as their condition will be too poor (if a person doesn't have the money to pay their house payment, the likelihood that they will be able to afford maintenance is slim).
Homes that are auctioned off at the courthouse steps will also require cash, as there is no real 'escrow process' when purchasing a property this way. Since it is purchased at the courthouse steps-that day-the money has to be there-that day. If you are getting a loan, a lender will require an appraisal, an application and many other documents prior to closing, which usually takes a minimum of 30 days. This obviously won't work at a bank auction. So, cash is king in this instance. Which, if you are having trouble affording a property, coming up with all cash could be difficult.
As with anything, ask questions. If you go to the auctions enough, you will probably begin to recognize those purchasing. Get to know a few of them, ask them questions. They may give you some information. The main thing is to go into it with your eyes wide open. Also, don't be afraid to branch out. For example, our area is expensive, whether it's a foreclosure or not-but areas around us are more affordable. Keeping an open mind about where to purchase will help immensely.
And as always, find a Realtor® that you trust. By purchasing a home at the court house-you cut out the realtor, but you also have no one to help you either. Your realtor is there to help you through the process and answer questions. They will work hard to help you find the right property for you and make sure the sale goes smoothly.
Remember: Just because it's in distress doesn't mean it's a good deal. One more thing distress properties usually need is Cash. Many properties in distress may not qualify for a loan, as their condition will be too poor (if a person doesn't have the money to pay their house payment, the likelihood that they will be able to afford maintenance is slim).
Homes that are auctioned off at the courthouse steps will also require cash, as there is no real 'escrow process' when purchasing a property this way. Since it is purchased at the courthouse steps-that day-the money has to be there-that day. If you are getting a loan, a lender will require an appraisal, an application and many other documents prior to closing, which usually takes a minimum of 30 days. This obviously won't work at a bank auction. So, cash is king in this instance. Which, if you are having trouble affording a property, coming up with all cash could be difficult.
As with anything, ask questions. If you go to the auctions enough, you will probably begin to recognize those purchasing. Get to know a few of them, ask them questions. They may give you some information. The main thing is to go into it with your eyes wide open. Also, don't be afraid to branch out. For example, our area is expensive, whether it's a foreclosure or not-but areas around us are more affordable. Keeping an open mind about where to purchase will help immensely.
And as always, find a Realtor® that you trust. By purchasing a home at the court house-you cut out the realtor, but you also have no one to help you either. Your realtor is there to help you through the process and answer questions. They will work hard to help you find the right property for you and make sure the sale goes smoothly.
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