Reasons To Buy A Foreclosed Home
Foreclosures are appealing to many buyers for several reasons, including:
- Lower prices: In most cases, buying a foreclosed home will cost you less than buying a comparable home on the market.
- Better return on investment: Because of the potential upfront savings, homeowners can invest extra funds into home improvements — which can produce a significant return when it’s time to sell.
- Fewer title issues : Bank-owned properties are thoroughly vetted ahead of time. The bank will clear the title for you, and you don’t have to worry about any issues the homeowner may have. That’s not the case with properties that are still technically in the homeowner’s possession or up for auction.
Find A Knowledgeable Foreclosure Agent
If you’re thinking about buying a foreclosed home, choose your real estate agent carefully.
“An agent who knows how the process of buying a foreclosed property works will be very helpful,” says Santosh Bhatt, a broker at Greater Louisville Homes in Kentucky. “Understanding the process allows the agent to manage buyer expectations. An agent with a lack of foreclosure experience can make the transaction a bit challenging.”
Look for agents in areas with high foreclosure rates or ask your lender if they partner with any REO agents. It can also be helpful to search for agents with Short Sales and Foreclosure Resource or Certified Distressed Property Expert certifications.
Best Premium Foreclosure Websites
Aside from the free options, it makes sense to review the best foreclosure website with a monthly subscription. Each real estate website listed below offer users more advanced search features and information for investors. If you are a real estate investor, you should definitely consider the foreclosure listing options on these premium sites.
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How To Find And Buy A Foreclosure
Finding a foreclosure is very similar to the process of finding any other home for sale. Many foreclosed homes appear on home listing sites such as yours truly. Or you can dig deeper.
You can typically find foreclosures if you just Google the name of your county and your state, with the search term home foreclosure, says Wesley Williams, owner of OC Real Estate in Louisville, KY. Look for a .org or .gov website.
Another other option is to call your county clerk and ask them where to find the next foreclosures coming to auction. When foreclosures are sold in an auction format they can occur in person, at a government building, or at the site of the property.
A local real estate agent can also help you find and purchase a home in foreclosure.
Reasons To Move To Richmond Hill Georgia In 2022
Prospective homebuyers are clearly taking advantage of the low interest rates and numerousgovernment assistance programs. These low interest rates mean homebuyers in Richmond Hillcan now afford much more house for the same monthly payment . Motivated andopportunistic sellers in Richmond Hill, meanwhile, can field multiple offers from morequalified buyers.
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What Is An Reo Property
Bank-owned or REO properties are foreclosed homes that were repossessed by lenders. Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase mortgages from lenders, also have REO properties. The term “real-estate owned” comes from an accounting term “other real estate owned” used on bank financial statements. Nonbank mortgage companies sell all the mortgages they originate and don’t own REO properties.
Here’s how a home becomes an REO property:
After a borrower fails to make mortgage payments for a certain period, a lender can begin the foreclosure process.
The lender issues a notice of default, then later, if the borrower still hasn’t made payment, a notice of sale.
Unless the borrower comes up with the money, the home is offered for sale at a public auction.
If the house doesn’t sell at auction, the bank takes possession of the property and sells it to traditional home buyers or real estate investors.
A home can also become bank-owned if the lender accepts a deed in lieu of foreclosure.
Benefits Of Buying A Foreclosed Home
- Lower prices: One undeniable benefit is that foreclosed homes almost always cost less than other homes in the area or they are listed below market value. This is because theyre priced by the lender, who wants the home off of their books.
- Standard loan configurations: You might have to follow a slightly different bidding and buying process when you buy a foreclosure, but you still have a few loan options as long as its not a cash-only auction. As long as the home youre considering is in livable condition, you can get a conventional loan or a government-backed VA loan, FHA loan or USDA loan to buy it. Government-backed loans can make homeownership more affordable, but you if the property is damaged, the government may require work to be done.
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Look For Foreclosed Homes Available For Sale
Now, you can start looking for foreclosed homes available in your target area. A real estate agent can help you search for homes and negotiate prices, but you can also look for foreclosed homes yourself. There are different types of foreclosed homes and the purchase process will vary between them. Regardless, you will know your maximum budget with a pre-approved mortgage, but you should make sure that you have enough money left over for inspections,closing costs, insurance,property taxes, and repairs.
Your real estate agent should know where to look for foreclosed homes, but if you want to look on your own, you can look through online listings, local newspapers, or your local city hall/court.
At this stage, its important to make competitive purchase offers. While foreclosed homes are generally much cheaper, the bank selling the foreclosed home may reject purchase offers that are too low. The bank is trying to recover their money, not simply give homes away! A real estate agent can help you determine a good purchase offer based on the information for your local area. This may also includewriting an offer letterormaking a backup offeron the home.
Communicate With Your Lender
If you know that you are going to have trouble making your mortgage payments, contact your lender immediately and let them know you are having financial difficulties. This allows your lender time to work with you to create a plan. Remember, do not stop paying your bills, and do not wait until you cannot make payments before you act. Learn how to talk to your lender about trouble making payments.
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Purchase Your New Home
Read your inspection and appraisal results then decide if the home in question is really right for you and whether youre okay with buying a home as-is. Contact your mortgage lender to finalize your loan if you have the money or skills to make any needed renovations. Your real estate agent will help you submit your offer and prepare you for closing.
Find a local pro.
Where Can I Find Pre
To find possible pre-foreclosures in your area, enter your search area on Zillow, then click Listing Type and choose Pre-Foreclosure under the Potential Listings heading. Pre-foreclosure information is free after you register with a free account.
Be aware that a home listed under the pre-foreclosure category is a home that is not necessarily for sale. But, since the homeowner is in default on his loan, he may welcome an opportunity to find a qualified buyer who can help him avoid possible foreclosure. Also, the home could be scheduled for foreclosure auction under this category.
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Find A Real Estate Agent
Buying a foreclosure is not something you want to without a real estate agent. In fact, in many cases, banks and governments will not sell directly to individuals and require you to use an agent.
That said, not all agents have experience with foreclosures, so its important to find one who knows the foreclosure process inside and out.
Determine How Much Home You Can Afford
Budgeting matters when buying a foreclosed home. Yes, you might be able to nab your new home at a lower price tag. But foreclosed homes arent free. And despite what you might have heard, you cant buy a foreclosed property for $1 either.
Youll need to craft a household budget listing your monthly income and expenses to determine how much of a mortgage payment you can afford each month.
If you dont do this, you might purchase a home you cant afford even if youre looking for a foreclosure. By purchasing a home thats out of your budget, youll struggle to make your own mortgage payment each month.
As with any home purchase, its important to predetermine your debt-to-income ratio. As the name suggests, this ratio analyzes how much of your gross monthly income your monthly expenses will consume.
Most lenders want your monthly debts to take up no more than 43% of your gross monthly income. If your debt-to-income ratio is higher than that, youll struggle to qualify for a home loan.
Be especially careful when buying a foreclosed home. You might be tempted to buy a foreclosure with a price tag thats at the very top of your budget.
The problem with this is that the foreclosed home might require expensive repairs. If youve purchased a home at the top of your budget, you might not have enough money to afford those needed repairs.
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Make A Competitive Purchase Offer
If the home is in pre-foreclosure, your real estate agent will need to present the offer to the individual who currently owns the home.
If youre looking at a foreclosed home thats headed to auction, youll need to contact the trustee or attorney whos running the auction to ask any questions about the house before the auction takes place.
A trustee is a third party who runs a foreclosure auction on behalf of a lender or government agency. This official accepts the bids during an auction.
If the house is REO, your agent will present your offer directly to the banks listing agent.
A buyers agent will never have direct contact with the bank. The process is similar for government-owned listings: Your real estate agent will again present your offer directly to the government agency listing the home.
You might be tempted to make a low offer on a foreclosed home. Its true that foreclosed properties often sell for less than traditional homes. But if you make an offer thats too far below , the sellers might reject it.
Its important, then, to work with your real estate agent to make a competitive offer. Your agent will advise you on what this figure should be.
You should also include a contingency for a home inspection in your offer. This contingency says that the home sale cant be finalized until youve scheduled a home inspection of the property.
How To Buy A Foreclosed Home
You might be intimidated by the thought of buying a foreclosed home. But the process of purchasing a home in foreclosure isnt too different from the traditional way of buying a home. Buying a foreclosure does require additional research, and youll need to be comfortable taking on a bit more risk.
But if you work with a real estate agent who understands your local foreclosure market, the stress shouldnt be much higher than during a traditional home buy.
Here, then, are the steps you need to take in order to successfully buy a foreclosed house.
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Home Value Estimator For Richmond Hill Ga
There are currently 9,724 real estate properties in Richmond Hill, GA,with a median automated valuation model price of $289,100.00. What is an AVM? It isa smart computer program that analyzes and predicts the approximate value of a home,property or land in Richmond Hill, GA, based on current market trends, comparable realestate sales nearby, historical data and, of course, property features, among othervariables. These automated home estimates are often very helpful, providing buyers andsellers with a better idea of a homes value ahead of the negotiation process. For example,the average home price in Richmond Hill, GA, is $319,651.00, with the most expensive housein Richmond Hill, GA, topping out at $5,291,900.00 and the cheapest home in Richmond Hill, GA,clocking in at $59,300.00. In other words, theres something for every potential homebuyeror savvy investor in Richmond Hill, GA!
Veterans Administration Loan Program
The federal Veterans Administration has a mortgage guarantee program that is open to current service members, veterans, and surviving spouses. According to Military.com, the loans can be used to buy repossessed properties, although a bit of advance preparation is needed.
Benefits include zero down-payment loans, reduced closing costs, and a waiver of the mortgage insurance requirement.
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Local Newspapers Or Title Companies
Sounds crazy, I know, but foreclosures are still published in local papers. These papers generally come out once per week. Checking local papers is a great way to locate homes that are just entering the foreclosure process so you can reach out to the owner directly, or you can track them and bid on them at the auction.
If you are lazy like me, you might prefer to get foreclosure lists. Some title companies get these lists and send them out to their clients for free. These lists include all the properties that have entered into the foreclosure process, making it easy to put together mailing campaigns to owners or start to try to track them down to call or knock on their door. Ask the title or escrow company that helped you with your last real estate closing if this is a service they can provide. If you are brand new, a reputable real estate agent should know how to get these lists.
Protecting Yourself When You Buy
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Get Your Financing In Order
Before you start looking to buy a foreclosure at foreclosure auctions or through REO listings, its important to make sure you can get a mortgage. Buying with cash is the surest way to secure a property, but thats not an option for most homebuyers. If youre planning on using a loan to buy a foreclosure, youll want to prequalify and gain preapproval before you start looking. This is because youll have to show proof of funds before your offer is accepted, most of the time when buying a foreclosed property. They wont wait around for you to go get financing.
Preapproval will give you your mortgage rates and terms before you put an offer in. While you may think that getting a mortgage through the bank selling the property is your only choice, its not. The lender treats the foreclosure and new loan as completely separate transactions, and they are. As a result, its not easier or even advantageous to use the same bank, unless the rates and terms make sense for you. Finding the perfect mortgage lender doesnt have to be hard.
If youre planning on making a cash offer to buy a home, instead, then youll need to get your funds together and make sure they are ready to move when the owner of the home approves your bid. Youll have to move quickly once that happens.
Risks Of Buying A Foreclosed Home
Don’t let an appealing price tag lead you into home-buying mistakes. There are serious risks involved.
- Expensive repairs: “Most experienced agents will not take first-time homebuyers to foreclosed properties since, often, they are in rough shape and could become money pits,” says Bhatt. Count all the costs before you close a deal.
- A drawn-out buying process: Because you’re dealing directly with a bank, there can be more red tape involved.
- Steep competition: If home prices continue soaring in 2021, foreclosures may become a popular way for buyers to find a deal, leading to increased buyer competition and higher prices.
- Redemption periods: Most states offer a period of redemption after a foreclosure sale. During this period, the original homeowner could still catch up on payments and earn their home back — even after you’ve moved into the house. Redemption periods can range from 30 days to a year, so be sure to check your state’s laws before you buy a foreclosure.
- Squatters: If a property has been abandoned for a while, squatters may be living there. And if they’ve been there for an extended time, you might run into problems. All states have laws that grant squatters rights of adverse possession after a certain period of time meaning the property legally becomes theirs. In some states, this window is as short as five years, but it’s usually longer. Make sure you assess your property thoroughly to avoid any potential squatter disputes.
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