Aren’t Foreclosures Easy To Buy?

Have you ever heard the bar bell? The one that rings around closing time for last call, and as a reminder that it's time to pay the tab. In the U.S., the bell is oftentimes used to signify a generous tip.

In the home foreclosure business, there aren't any bells to ring, but there are an abundance of great deals to be had, if only ready, willing and able buyers have the necessary tools to avoid the pitfalls.

There are a number of roadblocks to purchasing a foreclosed home. They include:

1. The Bank handling the property. As most Realtors can attest, this is THE most difficult hurdle in the transaction process. The bank is THE BIG DOG. They literally control the entire transaction. Unfortunately, when, what, and how they process a foreclosure is less than transparent. When they speak, we all listen attentively.
2. Many agents haven't been trained in the finer points of listing or buying REO (Real Estate Owned - by banks or lenders) properties. As a result, one side of the transaction never gets any traction, and unfortunately the clients are left holding....nothing.
3. Buyer expectations aren't realistic. As I'm reminded from time to time, "Disappointment is the result of expectation. If you have no expectation, you won't be disappointed." Foreclosed properties can be a great deal, but they are purchased, "As Is". According to the Northern Virginia Contingencies/Clauses Addendum to the Sales Contract, that meaning is fairly clear:

"The seller makes no representation or warranty, express or implied, as to the condition of the Property, or any equipment or system contained herein."

Pretty clear, don't you think? Unfortunately, many purchasers don't feel that way. Despite the "As Is" clause, they want guarantees. So, many resort to home inspections as a condition or contingency in the contract. While many of these begin as "for informational purposes only", before it's all over with, they're used as leverage in the transaction. And, the good news is, as this chapter in the mortgage mess has evolved, so too has the attitude of many banks in attempting to get these transactions closed. What banks often refused to repair/replace two years ago when the mortgage dominoes began to tumble, are now often given a thumbs up when requested by the purchaser. So, as they say, you never know unless you ask.

4. Lastly, many will argue that today's market is the polar opposite of what it was in 2003-2005. However, there is one striking similarity to those days that makes buying a foreclosure a challenge; multiple offers. Everybody wants a bargain, especially investors. So, not only do prospective home buyers have the normal "other buyers" to compete with, they also have the bargain hunter experts, whose FULL-TIME job is to purchase distressed properties.

So, facing all those challenges, how does a buyer compete?

1. The best way to buy a home is to use someone who has the expertise. Yes, a real estate agent is probably a good start. But, how about one that's had some experience or training with foreclosures and short sales. Both of these types of transactions require more than a passing understanding of what those terms mean.
2. Catch the properties AS SOON AS they hit the market. If you don't, another buyer will.
3. Trust your agent. If you've done your due diligence in selecting your agent, and discussing your needs, then leave it in their hands. It is what they are trained to do!
4. Go in with your eyes wide open. It not only improves the odds of success, but minimizes any unnecessary worry and disappointment.

Are foreclosed properties easy to buy? If you're fortunate, perhaps. But, more than likely, if it's a bargain property you've got your eyes on, you're not the only interested party. So, do your homework first. Have realistic expectations. Enlist the aid of a knowledgeable, experienced agent that's worked some foreclosed property transactions. And lastly, you might want to get ready to rumble!

To Continue Reading this Article, Click Here: Aren't Foreclosures Easy To Buy?