What You Need to Know About Buying Foreclosures

Buying a foreclosure can be an excellent way to save money on a new home or on an investment property. Still, whether shopping for Colorado luxury condos or a sprawling home in Tampa Bay, before you decide to purchase a foreclosure there are several things that you need to keep in mind.

The Inspection Process can be Tricky

When purchasing real estate, most homebuyers chose to have the property inspected by a professional. This way, they can be sure they are aware of any problems with the property and they can make sure these issues are addressed before actually purchasing the home. With a foreclosure, however, an inspection may not be an option. In fact, some foreclosures are not open to inspection at all. In this case, you will have to make your decision based solely on the information that is contained in the listing. Furthermore, even if you are permitted to complete an inspection, you will not have the option to have repairs made before you purchase. Rather, you will have to calculate the cost of the necessary repairs when determining how much you are willing to pay for the property.

If you are unable to complete an inspection, there are a few guidelines that will help you determine if the home will make a worthwhile investment or will become a money pit. First, keep in mind that homes built before 1978 may contain lead paint. Second, consider the current market value of other homes in the neighborhood. This way, you can determine a reasonable resale value after you have completed any necessary repairs.

Financing Procedures Differ

Obtaining financing for a foreclosure is different from financing a traditional property. If you will require financing for your purchase, you will need to check with the lender before you place a bid on the foreclosure. In fact, in many cases, you will need to be able to hand over the cash almost immediately after winning the bid.

Several Types of Foreclosures are Available

Many people who are interested in purchasing a foreclosure are unaware that there are actually several different types of foreclosures available to select from. The most familiar type of foreclosure is the REO, or real estate owned, foreclosure. With an REO foreclosure, the owner has defaulted on a traditional loan and the bank has regained ownership of the property. Since an REO foreclosure may involve any number of different banks, lenders and trusts, the procedures for purchasing an REO foreclosure may vary significantly.

In addition to the REO foreclosure, VA and FHA foreclosures are also available. With these types of foreclosures, the owner took out a loan through either the Department of Veterans Affairs or through the U.S. Department of Housing and Urban Development. Since the government regains ownership of the property in both of these types of foreclosures, there is a very specific process that must be followed in order to purchase a VA or FHA foreclosure. Therefore, it is best to contact a real estate agent to help with this process.

About The Author – Brian Kinkade works with homebuyers within the Denver luxury condo market, including Art House Condos Denver, and is a licensed real estate agent with The Home Cart team. This guest post is brought to you by the Clearwater Real Estate team; hope you find it informative.

To Sell or not to Sell?

I am getting the same question from many of my potential sellers. Is now a good time to sell my home? That is a very good question and a very subjective one as well. First thing I ask is what is your motivation for selling?

Do you have to sell for financial reasons, are you getting a job transfer and have to relocate, or are you just trying to sell and buy a bigger, better home while prices are down and interest rates are incredible? All those questions have a different motivation. Let’s break it down.

First – Do you have to sell because of financial difficulties? This is perhaps the most difficult question for me to answer. In order for me to help you make the right decision you need to provide me with all the facts. I don’t care how embarrassing it is to tell me you are behind on your payments or that you anticipate not being able to make your next mortgage payment. I need to know your situation.

If you are in a financial crisis, you need to be able to communicate that to the right people. First I would advise you to call your mortgage provider and talk through your options with them. Do you have equity in the home or are you “under water”? If you are under water you might need to explore the option of a short sale.

If not and you have some equity in your home don’t think your home is going to save you from the abyss! Price it to sell and get out of it so you can and move on. Ask your Real Estate Agent what price it needs to be at to sell in 30 days. They should be able to give you a price that is fair but will get you out of the home in a timely manner. The less you put into it now the faster you will be able to recover.

Next – I would advise you to consult an attorney and see what options you have legally. If you have equity in your home you would like to save, make sure you know all the consequences if you are considering bankruptcy. If you decide to sell in the end make sure you price to sell and cut the losses both financially and mentally.

The next reason to sell is relocation. There is a whole new set of questions I would ask you in this case. First I would ask if you are getting a relocation package. Is your new employer paying your moving expenses and Real Estate commission fees? Obviously that is the best case scenario. Be aware with many relocation companies they require you to use their “preferred” agent.

This is usually someone they have an agreement with in advance to pay a referral fee and is qualified to fill out their endless paperwork. Next do the research on the new city you are moving to. See what the cost of living is there and how it compares to the area you are leaving. Your area’s prices might be down 10% over the last 2 years but the area you are moving to might be down 25%. That is a great trade.

You may be getting less here but be getting a much better deal on the other end. The key here is also making sure you price to sell in the next 30 days. You are on a time line and maintaining 2 households can become more expensive than taking a bit of a loss on your current home.

Last – The last reason to sell is to “Buy Up”. What a great time to move up!! Prices are great, interest rates are great, and inventory is plentiful! Oh wait, what was that last one? Inventory is plentiful. Does that me it is going to be harder to sell my home and also get gouged on the price?? Yes it does.

But, let’s look at it from a different perspective. If you are in a starter home, that is the segment that has taken the least hit in today’s market place. Mid-range and upper end homes have taken a beating. You may get a little less than you expected but you might get the deal of the century on your new home.

Bottom line is I would advise everyone to do their homework. Don’t put your house on the market if you are trying to get a premium out of it. Those days are gone and you are truly hurting the people that really, really need to sell. It is still a good time to sell your home, just make sure you understand your market.

Call us at Lipply Real Estate to discuss your situation in detail at 888-423-5775. We have been selling Tampa Homes for a long time and have tons of experience in Clearwater Real Estate and Tampa Real Estate.