Much like the questions that Darcy and I have been receiving about Short Sale Homes, we also get questions about foreclosed homes. I would like to take some time to address some of the questions that we are frequently asked.
Are Foreclosed homes more difficult to buy? In a word no, but often they are sold in “As Is” condition. This means there will be no repairs done to the home. Some banks will go in and clean the houses out make minor repairs and in some cases replace the carpeting. Once they have done that, they are done. As far as submitting an offer it is much like a traditional sale, and they usually go relatively smoothly after the offer is accepted.
Does it take longer to buy a foreclosed home? Not typically, again after the offer is accepted, the transaction generally is a smooth one. Some banks like Bank of America, require that they buyer either prove they have the funds, (All Cash buyers) or make the buyer qualify under their credit criteria before they will accept the offer. You do not have to get your loan through them, they just want to look at your credit before they will accept the offer.
Is the paperwork different for a foreclosed home? You will still fill out the State Approved Real Estate Purchase Contract or REPC, however the bank will usually send their own paperwork, written by their Attorneys that will need to be signed.
What is a REO Property? The easy answer is that it is a property that has gone through the foreclosure process. REO means Real Estate Owned, which usually means owned by a corporation, often a bank.
Is the price negotiable? This depends on a couple of things, mainly how long the property has been on the market. Like any other property, you can always ask for a lower price, but it is up to the bank’s representative whether or not the offer falls within the range that they wish to get for the property. Basically, it depends on the bank’s bottom line. The good news is that really all they can say in no.
How long does it normally take for the Sale of a foreclosed home? Right now in our market, we are telling people 30 to 45 days, which is what we tell people buying a home in the traditional sales process.
Is it possible to buy a foreclosed home that is a fixer upper with a loan? This is another one that honestly depends. There is a loan product called a 203K, which allows up to $35,000 towards making repairs. You can even use that money to purchase new appliances. The catch is finding a lender that offers that loan product.
What about HUD Homes? This is a subject that I wish to tackle completely in another blog. The short answer is that you have to buy through a HUD approved broker (Which ERA Realty Center is), and the earnest money that you have to put down is dependent on the sales price of the property.
Foreclosed properties are often a great deal, but as with all real estate purchases, we highly recommend that you hire the services of a reputable Home Inspector to have all of the inspections completed on the home. Your loan will most likely require that you do this, and often the costs are included in the closing costs of the loan. It is a large investment, so we can’t stress strongly enough, the need to have any home that you’re going to buy be inspected. It is honestly well worth the money that an inspection costs!