I’m the last person to suggest you should profit off of somebody else’s misery, but the housing market is in the dumper and one of the best ways to get out of it is for qualified people to start buying. Now, with the influx of homes in foreclosure, this may be a good time to jump in and get your feet wet. But, before you consider purchasing real estate that the bank owns, you should do a little research, and please don’t buy any home without getting it appraised by a reputable real estate appraiser who can make sure you are paying fair market value.
First let me give you some fact; according to RealtyTrac, lenders repossessed 197,800 homes in the first four months of 2008 vs. 90,800 in that period last year. Banks don’t want to be in the real estate business, so sometimes they’ll accept much less than you might think to get rid of them – especially in markets having lots of trouble. But buying such properties has drawbacks. Real estate is almost always a good investment, especially if you’ve had it appraised, but before you run out and spend your hard-earned cash, here’s what you need to know.
1. When looking for real estate that has been foreclosed, let you’re your fingers do the walking through the web. For example;
Redfin.com, lets you do a free search for so-called real estate owned (REO) properties – those for which the bank holds the deed – in Baltimore, Boston, Los Angeles, San Diego, San Francisco, Seattle and Washington, D.C. (and soon, Chicago). This will help you narrow down your search, and while your online you can look up the closest real estate appraiser in your area, just make sure they are experienced and thorough. GOD knows we’ve all had enough shady mortgage lenders who strong-armed many appraisers to bring in values higher than what was going on in the housing market (as if the value of homes wasn’t overly inflated as it was during the bubble.) Another place you can look is foreclosures.com.
2. Another thing you can do to improve your chances of getting the best deal is to get a broker. I know, they don’t have the best reputation right now, but an honest and ethical broker will help ensure you don’t pay more than you have to, and they will probably get a real estate appraiser involved to help you understand the current value of the home you are thinking of buying. But keep in mind; you’ll want to find the real estate that is REO before going to the broker; doing a little leg work on your own ahead of time will help speed the process along.
3. Finally, look for homes and real estate that have been on the market for a while, like over 90 days. The longer a property is on the market, the more desperate the bank is to get rid of it. But be very careful, because bank-owned houses typically need a lot of work: People facing foreclosure often neglect maintenance and may have swiped fixtures and appliances on their way out.
Never buy an REO property without an inspection, and be sure to factor repair and remodeling work into your offering price. Again, this is another good reason to get an appraiser involved as well.
Well, there you have it. I know it can be a little uncomfortable to buy a house somebody else was kicked out of, but remember many of these people chose to walk away. That being said, getting this influx of real estate off the market will help the housing market correct itself, so you’re just doing your part to help the economy.
If you are considering a purchase, please visit us at www.iappraiseforyou.com for all your appraisal needs.