No Surprises in Buying a Foreclosure Property

Mortgage and Lending with Top Flite Financial Inc.

In Mississippi, we have a program sponsored by the federal government to help stabilize neighborhoods that have been negatively impacted by the presence of foreclosures.  This program is a one-time payment assistance grant for individuals buying foreclosed property.  The total amount of assistance can reach up to $39999 based upon a person's credit score. The individuals have to qualify for the amount of the purchase price and the downpayment but if they are buying a HUD home their initial investment can be as little as $100 for the downpayment and their prepaids (taxes and homeowner's insurance policy)  There are also income limits.  As you can well understand this is a very popular program imagine taking between $15,000 to $39999 off of the price of a property. 

   I have been working with a few buyers, wanting to take advantage of this program and thought I would share some of the things I have discovered while working with people who are looking at buying a foreclosure property,  hopefully it will eliminate some of the surprise factors if you choose to work this market.

1. First and foremost - let your buyers as to what they can expect before you view any properties  Tell them to expect missing appliances, cabinets, siding, plumbing, windows, electrical fixtures.  There will in all likelihood be bugs on the floors, dirty walls and the house will not smell good most of the time.

 In the winter it will be cold and in the summer it will be hot. Tell them to dress comfortable with sensible shoes.   The electricity and water are disconnected in most cases. Don't expect to be able to use the facilities. Bring a flashlight and a measuring tape.  Some banks do have the water and electricity on but many do not.

2. Evaluate your clients needs-  Use a form to assess their needs

     a.  Evaluate their eagerness and motiviation.

     b.  Are they willing and able to follow through on your advice and suggestions.

     c.  What is their risk/reward threshold?

     d.  Determining if time is of the essence for the buyer.

     e.  Communicating a realistic timeline for closing the transaction- 60-90 days and in some cases longer.

     f.  What type of financing will they be using...this will determine what type of foreclosure they can realistically purchase.  Some mortgage companies don't offer the type of loan they will need, if the damage is extensive.

3.  Red Flags : 

  If they don't understand the true meaning of "as-is" and ask- "Do you think they will replace the appliances?"  after you have explained "as-is" several times. 

  If they wrinkle up their nose and say "eeewwwww roaches...this is so gross!" time and time again.

  If they want to know if the contract can be made contingent to the sale of another house.

  If they don't have the means to repair and rehab the property and don't qualify for a 203K loan, you are wasting your time and theirs by showing them homes that need more than cosmetic repair. 

  If they think the bank or the seller will come down 50% off the listing price.

Prepare your clients so there are not any surprises and you will be surprised to find out that selling foreclosure can be a very rewarding enterprise for both the buyer client and the realtor.  We can make a difference in helping to stabilize some of these neighborhoods.

  For more information  about the Mississippi Home Buyer's Advantage program paste or click on this link-



Comments (3)

Liz Flint
Century 21 Hardee-Team Realty - Houston, TX
Houston\Tomball Realtor (832)816-8066

Hi Virginia, good list.  I like the roach issue.  And, the comfortable shoe suggestion.

Jun 12, 2010 08:05 AM
Kymberly Caldwell-Muniz
(909) 973-0410 - Fontana, CA
TCR Group Keller Williams Realty Rancho Cucamonga

Hello Virginia, good post, thanks for the information.

Jun 12, 2010 01:03 PM
Marguerite Roland
RE/MAX Allegiance - Burke, VA
Northern Virginia

This is a great blog.


Thank you for the information

Jun 14, 2010 04:03 PM