House on Golf Course

Many buyers are hoping to buy a home at bargain rates by looking to the large number of foreclosed properties on the market. There are indeed many such REOs  (real-estate owned properties) or bank owned properties on the market, and they are often sold at low prices. However it is a complicated business with potential disadvantages.

RISMedia reported on Monday that many foreclosed properties are in various states of disrepair, neglect, or have even been vandalized, sometimes by the former owner. Furthermore, most foreclosed properties are sold “as is;” that is, unlike the situation where the owner is selling his lived-in home, the bank will usually not pay for any repairs or guarantee the condition of the property. Accordingly a thorough pre-purchase inspection is important.

Banks usually discount the price of the property 20-30%, but they are usually unwilling to even consider further bargaining. Also there may be multiple buyer offers,  so it is important to prepare everything well in advance, especially the financing and documentation, so that your offer is more likely to be chosen by the bank.  Some banks even require the potential buyer to obtain loan approval from the selling bank even if they are not to be the lender, in order for them to verify the buyer’s financial situation.

Although there are bargains available in foreclosed properties, it is sometimes easier and safer to purchase a seller owned property or a short sale.

This entry was posted on Thursday, October 8th, 2009 at 10:29 pm and is filed under Buyers, First-Time Buyers, Homes Foreclosure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.