I have a buyer who has been approved for a FHA mortgage who is interested in purchasing a foreclosure property. However, my client does not have much cash and needs downpayment assistance and closing costs to be paid for. If we offered close to the asking price do you think that the selling institution would be willing to pay for the downpayment and closing costs?
I have never had a client purchase a foreclosure before so any advice that you can provide is GREATLY appreciated!
Is it a HUD foreclosure?
If so, FHA has a great program ta assist your borrower.
If not a HUD foreclosure, FHA i still you best bet!
You need to find a FHA lender in your area.
You might want to contact Flagstar Bank, because they are one of the biggest FHA shops in the country.
I work next to a guy who is an REO listing agent for several major banks. He currently has about 160 foreclosure listings. The trouble with your deal is not that it can't be done. You can ask for down payment and closing costs and all that stuff. However, the bank (trust me on this, as I see it everyday) will take anybody elses offer before yours because yours is totally weak. I hear every week how a person in a situation like your buyers offers full price, and the bank throws it out and sells the property to someone else for $30,000 less to a buyer that has some real money to put down and close escrow. Lenders do not like weak borrowers offers on foreclosure sales. They want the property sold and gone. Money talks! Begging for assistance and pleading for closing costs does not get their sympathy. However, to answer your question... Go ahead and place the offer. You certainly can buy a foreclosure with an FHA loan, just like you can buy any other type of propertys with an FHA loan. If the bank receives no other offers, you might just get lucky. With the experience I have in this area, I would advise my client that if he even wants his offer considered, he should come in about $5,000 to $10,000 OVER LIST PRICE.
Elizabeth - I concur with Rhonda. Among the other obstacles mentioned , the biggest hurdle that I foresee for you and your client will be the repairs mandated by the FHA Appraiser to get the home up to standard. These are traditionally stricter and more product specific than those necessary for conventional financing. My suggestion is to try to get in the home with someone who has at least a working knowledge of what an FHA appraiser might cite (which may, in fact, be little or nothing depending upon the condition of the home) so that your client has an idea of what the repairs may cost.
Comments(5)