Best Tips for
Buying Foreclosed Homes
Everywhere you look today more and more homes have gone into
foreclosure. The numbers are staggering. There is a silver lining to
this mess if you are considering buying a home in today’s market.
This is one of the greatest opportunities to buy a home for 20% to
40% off of the original market price of the property.
First let me tell you that I have been selling real estate in Ohio
for the past 15yrs. I am a full time realtor and I work the Central
Ohio market. I also specialize in selling REO properties. For those
of you new to the foreclosure world, REO stands for Real Estate
Owned.
Banks have REO departments that handle their in house inventory of
homes. Banks do not like being in the real estate business
and so
they farm out these listings to agents who work this segment of the
market. Handling REO listings is completely different than marketing
a fair market or retail property. REO homes are vacant, usually have
damage and most are the eyesore on the street. You can pick out one
of these homes easily if you know what to look for.
The signs to
look for are:
•Yard is overgrown
•Papers piling up on the front porch
•Boarded up or broken windows
•Orange tag tapped to the front door
•Lockbox on the front door handle but no sign in the yard
•Equal housing logo taped inside the living room window
Tips on buying:
- • Use a realtor who works REO…they know the best deals
available. A realtor is paid by the seller…for
a buyer their services are FREE. Let your realtor do the
negotiating. They know how the game is played and can factor in
items for you that you probably never thought of. Their job is
to get you the best deal possible on the home.
• Don’t take on more in repairs than you can handle… especially if this is your first fixer- upper. Repairs always cost more than you budgeted for. Pad the estimate and know you can afford it.
• Choose a good home inspector. I can’t say it enough…CHOOSE A GOOD HOME INSPECTOR!
I always recommend that my clients use an inspection company that uses Structural Engineers for their inspectors. In the State of Ohio, home inspectors do not have to be licensed. Any Tom, Dick or Harry can open shop and say they are an inspector. Make sure they are a reputable company and have some qualifications. (Ex. Have they been in the building trade? Are they a Structural Engineer? How long have they been doing inspections? ) You get my point. Do not have your friend or dad do your inspection. Too much money is at stake not to know what you are buying. - • Have your agent do a CMA(comparative
market analysis) on the property. You need to know what
the market is doing in that area for the past 60 days, 6 months
and for the past year. How much are prices falling? How many
homes in the subdivision are REO properties or vacant? This can
have a huge impact on future values. Some subdivisions are reo
driven and the values are plummeting. You don’t want to over pay
and find out that you have lost money. You need to know this in
order to offer a realistic price for the property.
• Financing the property. Most REO properties have great financing in place through the bank that currently owns it. Have your agent see what they are offering. Compare it to your financing that you have lined up. Always compare at least 3 banks before choosing. Do not let them pull your credit until you have made a decision on which bank you are using. Each time your credit is pulled your score is lowered. Too many inquiries will actually hurt you.
