Is now a good time to buy a foreclosure?
This is a very common question from both real estate professionals and prospective buyers. Obviously, because real estate markets vary, the answer is different from market to market. In Utah, Bank Owned aka REO properties are on the rise and with low historic interest rates – there are lots of great deals in certain areas such as Saratoga Springs, Eagle Mountain, Lehi, Draper, Bluffdale and Herriman.
What’s the first step buyers need to take?
Talk to an experienced agent that has foreclosure experience. They can help guide you through the pitfalls and red tape usually associated with Foreclosures. The first thing you should consider is to get pre-approved with a local lender like American Lending Network. Ryan Robinson has offered a free credit report to anyone reading this blog and considering a new home loan. Visit www.amlend.com.
How can you tell a bad foreclosure from a good one?
Certainly there are great deals in many markets for both investors and buyers looking for a primary residence. But making a sound deal can be tricky. Buyers need to be wary of Short Sales which may have unpaid liens, including mortgage debt, taxes, construction loans, home equity lines of credit, and possibly a second or third mortgage. Any or all of these financial obligations could become the buyer’s responsibility when they purchase a property in pre-foreclosure or post foreclosure. Unless the property goes through a foreclosure auction and becomes a bank-owned REO, the outstanding foreclosure liens and fees could be simply transferred to the new buyer. Utah REO Experts guarantees all of our clients avoid these pitfalls. Visit www.UtahREOExperts.com for more details.
If I’m a qualifying borrower, can I appeal to banks for better loan terms?
Lenders are drowning in defaults-particularly in hard-hit real estate markets such as Arizona, California, Florida, Michigan, Nevada, and Ohio-so they may be motivated to cut a deal. If your have a good credit score, many banks will offer them a below-market-rate loan on a bank-owned home. Unlike paying down with points, this doesn’t cost anything in fees, and it gives the buyer the ability to spend more for the home.
What are the costs of buying a foreclosure?
Buying a foreclosure is similar to a traditional sale, however most properties are sold as is so it is wise for buyers to set aside some money for repairs or unknown issues. Remember it takes money to make money. The best opportunities are for buyers with cash, but similar deals are available to buyers with an experienced agent that understands how the banks work.
How does choice of neighborhood affect foreclosure investments?
Buyers looking for a good investment should generally avoid neighborhoods overrun with foreclosures, particularly newer subdivisions in overbuilt exurban areas. Investors will be tempted to buy foreclosures in these areas because they offer the steepest discounts-but they also carry the most risk of further depreciation. Look in well established neighborhoods with good schools and transportation. In Utah, there are pockets of areas that have been hit hard, but overall prices have only declined about 4% since last year. The main difference is that the buyer is getting more for their money.