foreclosures
Over the last few years the real estate market has been flooded with foreclosed properties. Also known as REO(Real Estate Owned) and bank owned properties. Depending on a buyers price range and expectations, they may be looking at a majority for bank owned properties. Most of these listings will fall under $400,000. This price range overwhelmingly first time home buyers looking to take advantage of the tax credit before it expires. I work with a lot of buyers that fit this description and there are a few things you must know before making an offer or even beginning you house-hunt.
First, most people already know that they are being sold “AS-IS”. This means that the seller will not make any repairs to the property whatsoever. However, the buyer can still have a home inspection contingency and have the option to terminate the contract should the results be unsatisfactory. It is considered a General Inspection Contingency. I have found that this is widely unknown and good news to buyers who may be looking at a majority of As-IS properties. Similarly, you must know that the condition of the property must be sufficient enough for financing. Again, most buyers in this price range will be obtaining an FHA loan. Well, The Federal Housing Administration requires that the property have no health, safety, or hazard issues and be considered livable. To pass this inspection done by an FHA approved appraiser, the property must have working main appliances(stove/oven, refrigerator). A dishwasher and washer/dryer are not required. There must be no exposed wires, mold, broken windows, missing handrails etc. It must have a working hot water heater and the heat must work too. The inspector must also determine that the roof has a minimum of 3 years life. Problem is, most bank owned properties have some of these issues and it can be difficult to purchase one with an FHA loan.
Next, the buyer must understand that they may not get an immediate response from the seller/bank and often times it could take about to a week depending on whether or not a weekend falls within those days. Yes, other offers may come in and you may now be in a multiple offer situation. You must know that it may take some time when writing the offer. Buyers can become very impatient and nervous during this process, but there is nothing that can be done. The banks move as quick as possible and have hundreds if not thousands of offers they are dealing with.
Lastly, they are may often times be delays in settlement due to issues with the title and/or deed. Sometimes the bank has not fully received possession of the property amongst many other logistical issues that can go awry. Yes you may be able to get a great deal, but these are a few things buyers should know going into this market.
Ben White, Montgomery County Specialist
Search for homes at http://www.choicerealestate.net/
Category : Blog