Buying a Foreclosed Property
By: Leslie Pandey, Senior Content Writer/Editor | November 7, 2007
Today’s Wiki Wednesday Feature: Things to Know When Buying a Foreclosed Property
Thinking about buying a foreclosure? With the way the market is heading right now, there are surely great deals on foreclosed properties to be had. But foreclosure can be a risky business: It’s important to be cautious and patient. Before you take the leap, you may want to read through this week’s featured article from the Real Estate Guide: Things to Know When Buying a Foreclosed Property. Written by the folks at Quicken Loans, this article delves into the three stages of foreclosure.
The first stage, pre-foreclosure, is when the owner has been notified that their home may be foreclosed, but they still own the property. As the article says, buying at this stage can be difficult because the sellers may be on a deadline and the deal must progress quickly. The second stage, buying at auction, is risky because there’s a possibility of unknown repairs and/or liens on the title. Plus, you may need to pay in cash in order to beat out the banks. The third stage is post-foreclosure, when the home is an “REO,” or real estate owned property by a bank or lender. At this point, the bank will likely hire a real estate agent to list the property. If the home has been on the market for awhile, you may be able to strike a better deal with the bank, since they want to sell these properties off as fast as they can.
The article also brings up some important tips to keep in mind when you’re shopping for foreclosures:
1. To have more negotiating power, get a full approval from a mortgage lender before you enter into negotiations.
2. How do you know you’re getting a good deal? Research, research, research. Be sure you’ve done a good bit of research on home values and recent sales in the area you’re looking in. (Zillow’s a good place to start!)
3. And once you’ve found a property, keep in mind that you have the leverage to ask the bank to pay for things such as closing costs and home repairs.
Ed: Wiki Wednesdays is a weekly feature that highlights helpful or interesting articles from the Real Estate Guide.
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Comments
9 Comments so far
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Nancy Jassak on November 8, 2007 2:02 pm
My home is on the Zillow and your photo is showing the street behind mine. All of our neighbors photos are not really their photos either.
My address is 411 Sundance Street, Thousand Oaks, CA 91360-1229 and your web photo is showing 406 Raindance. That house is 3 bed 2 ba and mine is 4 bed 3 ba but their price is listed as higher than mine. It is wrong. please check out your photos, my house has a red truck & black SUV parked in front. Most photos in the area are incorrect.
Thank you, Nancy Jassak
S.Gent on November 20, 2007 11:00 pm
I discovered this just in the nick of time. I’ve been searching for a foreclosure in Costa Rica for the last 6 months and I recently found an REO property at http://www.buysafecostarica.com . Starting the negotiations process with the lender can be a bit intimidating but this article definitely has some great suggestions.
john paul on November 21, 2007 2:28 am
is this a zillow official blog ? for real estate ? is there a way you can join or just read these posts ? is this blog for realtors ?
David Gibbons on November 21, 2007 9:11 am
John -
Yes, this is ‘THE’ Zillow Blog. All are welcome!
Minnesota & Wisconsin Lake Property on January 17, 2008 7:38 pm
foreclosure are very risk business, I agree. Many have made lot of money from foreclosure and many have lost too
Free Foreclosure Help on February 26, 2008 8:53 am
I would not buy a pre-foreclosure home in todays market. You just really do not know what the market is going to do in order to make a smart decision based on the help you find on the internet.
Many websites are focues on selling their product and not educating the borrower.
foreclosurefish on February 27, 2008 10:20 am
Although it can be tough to buy in “stage 1” when the borrower still owns the home and is in the foreclosure process, there are a lot of ways to get more time. I’ve found that having a prequalification letter from a lender, and just a letter of intent to purchase the home can persuade the mortgage company to put off a sheriff sale for at least 30 extra days. Yes, there are deadlines, and homeowners can’t delay a sale over and over again, but most lenders will postpone the auction if there is a reasonable chance to get the money rather than the property.
Chris on April 17, 2008 2:50 pm
Phase I of the foreclosure process is not for the faint of heart. The process takes persistence, patience, fortitude, and a strong stomach. Oh, and expect a lot of rejections.
My advice is “Run Forest run!” Keep looking, you will find the right property out there for you.
Real Estate Resource on September 28, 2008 11:37 pm
Buying from pre-foreclosures can be a great bargain since the prices lie between 20%-30% below market values.
Best Regards,
Jan