Buying a foreclosure or bank-owned home... the right way!
Julie Baldino and Kathy Frisbie, Brokers in Vancouver, WA get it correct in their advice on buying a foreclosure or bank owned home the right way. When working with buyers on these transactions, we take the time to educate them on these strategies. When listing REO properties, it is to often that buyers are not informed about the process. Thank you Julie and Kathy for your advice.
If you are looking for a bargain, and are ready to take the plunge and venture into a foreclosure or REO purchase... there are a few things buyers should be aware of. As a listing agent of bank-owned homes, I often encounter well-meaning agents who mistakenly misinform their buyers of the process. The result is complications later, late closings, and unhappy buyers.
My tips for a smooth foreclosure purchase are:
1) When the listing says "no FHA or VA"..... it means conventional loans or cash ONLY. As the listing agent of bank owned homes in Vancouver, WA and surrounding areas, I go over the property with a fine-toothed comb identifying issues that FHA and VA appraisers will frown upon. Sometimes, I have specific instruction from the bank NOT to present FHA/VA offers. Save everyone a lot of time and move on to the next great deal... it's not likely we will get issues past the appraiser anyway! 203k Rehab loans are an exception, of course.
2) When the listing says "as-is" - it means the bank will not be reducing the price for inspection repairs, or fixing anything.
This is a blog post in itself, but the general rule of thumb is DO NOT count on the bank sending in a crew of contractors to perfect the home to your liking. The home inspection is for your information only-it's not to send a laundry list of sheet rock repairs, missing downspouts, and water in the crawlspace for the bank to correct. "As-is" means "as-is".... and if this isn't for you, then neither is buying a foreclosure.
3) Do a home inspection for informational purposes only. Grandpa or dad may know a lot about construction, cousin might be a carpenter, and brother may be an electrician... but that does not make them experts on everything in the home. Get recommendations for a reputable home inspector and pay for one. They may find nothing.... but they may find something that will save you thousands. Remember, do not expect repairs or a reduction for issues found on
the inspection.... this is a take or leave it situation!
4) Buy a home warranty! Sometimes issues arise within 6-12 months that may not have been evident at the time if inspection. Spend a few hundred extra dollars and protect yourself with a home warranty. It will at the very least will give you piece of mind if you are nervous about the condition.
5) Don't offer too little on a competitively priced listing - especially when it's newly listed! Most of the banks I work with price their listings to sell within a couple weeks. Any offer less that 5% of asking price in the first month is not reasonable (especially if you are fighting people at the door to get in). If you thought it was a good enough deal to rush to see it.... so will a whole lot of other people!
6) Stay calm! Regardless of the surprises that come with buying a foreclosure, buying a home or investment should be enjoyable. If you aren't prepared to handle the little surprises and set backs - like delays in having utilities turned on, paperwork taking forever to come back, or surprise repairs that needs to be done.... this may not be the game for you. Besides, you are probably getting a great deal!
If you need assistance finding reasonable buyers for your assets, or premium buyer advice for REO, foreclosure, bank-owned, and short sale purchases... contact me today for assistance!
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