Love this blog post! So often people get caught up in the "Jon Beck" scam, where they think they can by an REO for $600. It doesn't happen that way, and they are getting harder to obtain due to all the local competition from investors, whether it be at the Trustee Sales, or via a bank owned MLS listing, if its UNDER MARKET, you will have competition :)
"I Want To Buy A Foreclosure !"
You've heard from so many 'sources' that foreclosures can be bought for pennies on the dollar, so why cant you have a piece of that world right ?
You go to many of the major Real Estate Search Sites and they have a 'Foreclosures' tab. You get excited to see that there are 24 in the town you are interested in, ranging from $450,000, all the way down to $15,000 !
You quickly go to the $15,000 'Foreclosure' listing, and see that it looks exactly like the $350,000 listing your brother just bought !
What A Bargain !!!!
So you click the button on the site to call a local Realtor, or you call another Realtor who you have seen advertised a lot in your area, and after you introduce yourself you tell them "I want to buy a foreclosure ... in fact I know which one I want. I saw this one in my town for $15,000 and I can pay cash for that right now - how do I get it" !!!!
So let's just take a breath, and take a step back for a quick second !
When you hear about 'Buying Foreclosures' there are two main ways to do it.
1) Once the home has 'Been Foreclosed Upon' and the bank has officially taken ownership, and they have put it on the market as an REO (Real Estate Owned) property. That is a 'Foreclosed' property. You can get access to these - if you are quick - via your local Realtor and your local MLS. BUT although these are usually priced less than a comparable private listing, they are pretty much NEVER pennies on the dollar !
2) Via Auction. Or Sheriff Sale. This is NOT going to be an option for almost anyone ! Usually this type of auction attracts investors and builders and developers, and the court usually requires major payments right there and then if you win the bid. It could be 20%, 50% or even higher, and you typically have to pay in the form of cash or a Bank Check - not a personal Check. Also, you often have not had a chance to look at the property unless you have got the list of homes up for auction on a specific day, and driven by the property. It is not common that you get to look inside and certainly unlikely you will get to do an inspection before the auction.... see why this is not for you ????? Yes, many of these sales are considerably underpriced - but this is a professional arena, where bids come from investors and builders who go to these for a living.
... and back to that $15,000 listing you saw - Just because it says $15,000 by that listing, does not mean that is what it will sell for. Sometimes that is just a specific portion of the debt owned, like the back-taxes for example - so things arent always what they seem !
When you hear the stories and documentaries on the TV of people buying foreclosures for $8,000, you need to take a breath and think again, because in most cases, if it seems too good to be true ... you know the rest !!!!
NOW, there is a third option to consider, and those are SHORT SALE listings. These listings are on the market and available, and are in some state of default, and may be facing foreclosure if they are not sold, or if the owner does not find a way to satisfy the current debt with the bank.
These Short Sale listings are often the best option for those seeking 'foreclosures', as banks will often sell these at considerable amounts below the current market value - often 15-20%.
For more information on Short Sales, contact your reliable local Realtor, who can locate any Short Sale listings in your desired area.
Good luck out there !
>> Dont miss other upcoming blog entries from "ThatBritishAgent" !
Sheldon Neal is a Realtor® with RE/MAX, specializing in Homes For Sale in Bergen County, NJ.
If you are looking for Bergen County Realtors, call local expert Sheldon Neal for all your Bergen County Buying & Selling needs !
Sheldon Neal ~ RE/MAX REAL ESTATE LTD.