How to Buy a Foreclosed Home

ks14446There is a major sale going on in the housing market, and with real estate appraisals coming up with comparables that are lower than ever, it may be the perfect time to buy. One of the questions my real estate appraisers in Valley Village are getting is how to buy a foreclosed home. This is also a big issue for real estate appraisers in North Hollywood. Though there are a lot of bank-owned properties available these days, trying to buy one can be risky. With a conventional home purchase, you have all sorts of protections against being taken, but in a foreclosed deal, its buyer bewares. There are, however, steps you can take to protect yourself and get a great bargain. Keep in mind that one of the best ways to find out what a house is worth is by checking on the comparables of the surrounding neighborhood and what their home appraisals were valued at.

 

The first thing you want to look out for is if the website you are going through to find out how to buy a foreclosed home is charging a fee. There are free ways to find out about foreclosures in your area like calling local brokers, real estate appraisers and agents. Like I said, my real estate appraisers in Valley Village as well as my real estate appraisers in North Hollywood are constantly out in the field doing home appraisals, so they have some of the most up-to-date information. The same is true for real estate agents and brokers; and because they want more business, they are more willing than ever to dole out free advice and information.If that’s a concern, try to negotiate to have the utilities turned on for inspection before you close on the home. A home inspection usually runs from $250 to $400 and can save you a lot of money if something is wrong with the home’s structure or systems. You need to know what repairs you’re on the hook for to determine whether the price is fair. This is also where a home appraisal comes in, because they document all of these factors in their official real estate appraisals that get used to determine the value of the home.

 

 One important thing to keep in mind is the fact that if the property has been on the market for less than 30 days, lenders are usually looking for full-price offers. After 30 days they may be willing to accept a lower price. After 60 days you can offer even less. So this is basic economics and supply and demand. Logically, the general rule is the longer the house has been vacant, the lower the price will be. So, one of the best things you can do when you’re trying to figure out how to buy a foreclosed home is find out which homes in your area have been on the market the longest.

 

Once you’ve found a home you want to purchase, you’ll want to invest in a full home inspection. This is always a good idea when buying a home and my real estate appraisers in Valley Village along with the real estate appraisers in North Hollywood recommend this to all of our clients, but it is especially important when buying a foreclosed home. Vandals may have stripped fixtures and appliances. What’s more, the utilities have probably been shut off, making it impossible to gauge the shower pressure or test for leaky pipes.

 

If you are looking at how to buy a foreclosed home, you also want to beware of the fact that s0me states have a redemption period that lets the original homeowner satisfy his or her debt and take back the foreclosed home during a specified period after a foreclosure. This is especially true right now, with all the steps President Obama is taking to try and save homes from foreclosure. You’ll also need to be patient because banks may take 60 days or more to decide whether to accept your offer on a foreclosed home. These lenders are looking at things like your finances, the home appraisal of the house and other competing offers. In fact, one of my real estate appraisers in North Hollywood just saw one of our clients go through a bidding war on a foreclosed house in the area.

While the housing market is clearly a mess right now, there is an upside to it; the fact that homes haven’t been this affordable in years. That being said, you want to be smart about your purchase and learn everything you can about how to buy a foreclosed home such as what the home appraisals in the area are going for. Find yourself professional and trustworthy real estate appraisers, lenders and agents and get as much information as they are willing to offer. Once you have done all that and researched as much as possible, you’ll be ready to go out and find your dream home.

The Housing Market Can and Will Recover

The current housing market is bleak: home prices and sales are plummeting, foreclosure proceedings are skyrocketing and mortgage rates are on the rise, but there is a brighter tomorrow, where real estate is concerned. Homes that are being appraised for lower values today will eventually begin a steady clime up in the near future.

 

In fact, according to a new study from the Joint Center for Housing Studies of Harvard University, “The State of the Nation’s Housing 2008,” finds the country poised to see an increase in housing demand over the next decade. The housing market will make a come back, it always does. Real estate appraisals will once again garner you a healthy value report, and mortgage lenders will start to feel comfortable giving loans to those with good credit. How may you ask? Read on and you will see.

 

One of the reasons the outlook in the housing market may perk up is the fact that America’s population is continuously growing, and with that growth comes more and more people who need a home. Since real estate appraisals rely heavily on the purchase and sales of real estate, this improves the market value of everybody’s home. Another factor is the increased life expectancy of our society. The longer people live, the more they purchase. Let’s face we are no longer content to stay in jobs for 20 years or more, and with longer life comes the desire for more variety, and that includes our homes.

 

Than we have the hotly contested immigration issue. One of the positive aspects of immigration is the fact that we have more people contributing to consumerism, and that includes the housing market. Many appraisers in the industry point to the fact that a lot of their appraisals are homes that immigrants own, which is why one study states that, “the good news is that we still have a growing population,” said Nicolas Retsinas, director of the Joint Center for Housing Studies and one of the study’s authors. “As long as you have more households, more people are going to need places to live.” This same study finds that from 2010 to 2020, the number of households in the United States will grow by an average of more than 1.4 million per year. That’s great news, especially considering the condition real estate and the housing market are in today.

 

Now, if you add to that the fact that right now the housing market has an influx of homes being sold, you understand why buyers are in a better position today than they were just a year ago. As I’ve stated in previous blogs, the housing market goes in cycles. Granted this last seller’s market cycle was doozy, but what goes up always comes down and that includes the price of real estate. Homes real estate appraisers were valuing at $500,000 and more here in Los Angeles, are now being appraised for around $300,000. While you could be pessimistic and look at that as a horrible thing for the housing market, you could also be optimistic and look at that as a great opportunity for those looking to buy.

 

I’m not saying that the housing market will turn around tomorrow, but it will turn around. At this point, it may just be that the outlook on real estate will just get better by the day. So, if you or somebody you know is thinking about jumping back into the housing market, please visit www.iappraiseforyou.com and complete your appraisal request form today.

 

 

 

 


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More Real Estate Appraisal Myths

Because there is so much confusion as to what a real estate appraiser does and what a real estate appraisal consists of, I am giving you a few more myth busters.

 

  1. A clean and tidy home can increase the value of your home.
    • While leaving dirty dishes in the sink and toys all over the living room floor will not affect the value of your home, real estate appraisers are people too, and just like you wouldn’t feel comfortable walking into a stranger’s home looking like a typhoon hit it, neither will they. That being said, good housekeeping, or lack thereof, does not affect your appraisal.
  2. Anybody can hang a shingle on the outside of their home and call themselves a real estate appraiser.
    • Federal law requires states to establish minimum standards and licensing practices for real estate appraisers. In California, for example, trainees must take several courses, pass an examination and complete 2,000 hours of supervised experience.
  3. A real estate appraiser is not obligated by law to advise potential buyers of defects to the home they are looking into purchasing.
    • This one is both true and false, depending on who your lender is insuring the loan with. For example, if the buyer is applying for a mortgage that will be insured by the Federal Housing Administration (FHA), the appraiser must survey the physical condition of the home and disclose potential problems to the buyer. No such obligation exists for non-FHA mortgages.

 

As you can see, real estate appraisers aren’t the enemy. In fact real estate appraisals can be a purchases best friend. Once you know what a real estate appraiser does and the value of a real estate appraisal, you will a have a leg-up on buying or selling your property.

 

Visit www.iappraiseforyou.com for all your real estate appraisal needs.