In the market to purchase a home (am relocating) and was curious what the big hoopla was on the online foreclosure listings. Is that some sort of a scam? If it weren't, wouldn't everyone buy a home that way? What's the catch? Looking for some knowledge on the subject. Thanks. -Ivan
Most foreclosed homes are shitty properties since the rich guy in the large house is not as likely to default on the mortgage (if he is desparate he would try and sell the house or get funds from elsewhere), it is usually the poor family in the small run down house in the bad part of town that has no choice but to default. Also when someone cannot pay their mortgage barely they are also not working hard to upkeep the house as that is expensive. So you have a poor property (in most cases) that is not being taken care of taken by the bank and sold. You are not getting a 1 acre large home in the great suburbs for a foreclosure song and dance. The TV shows make it look like you can buy McDreamy homes for pennies on the dollar but those nice homes are the rare exception in foreclosures and usually are bid up pretty nicely.
You're hearing more about foreclosures because there are more of them, and because they are the latest Get Rich Now crock. Foreclosures have many problems, which I won't detail here. Stay away. You are buying at a good time. Your best bet is to find good properties that have been on the market a long time, and don't be afraid to make lowball offers. Many sellers are very hungry. Find a good Realtor and tell him/her up front what you want to do, and have them run the MLS for properties in your area/price range that have been listed for a long period of time. Over 120 days. Make sure they know that you are going to be making low offers. If they have a problem with that, then find someone else who will work with you. Many agents are very hungry right now, and will happy to have the business. With low rates and a big inventory of unsold homes, you can get a great deal without screwing around with foreclosures. The best time to buy in years.
Appreciate all the feedback. lindq, lowballing is precisely what I plan to do. I'll be looking in the Northern NJ area -and as for realtors, I need to use a particular company that my work is paying for (since the relo package is fully paid). I'm looking in the 500-700 range. What do you suggest a lowball amount is? -40k? -20k? I also have the cash to pay in full, if that matters in the process at all. Though I think having some interest for tax deduction purposes is preferable. Cheers.
You do not need to go through those web sites, especially the ones that charge you. Here's a link to foreclosures. Any local RE agent can help you, some even specialize in foreclosure or REO (Real estate ownded) from banks. http://www.hud.gov/homes/homesforsale.cfm
Cash or not us up to you and your CPA. I prefer the mortgage deduction. The best deal going. A cash deal is somewhat more attractive to a seller, but if you have a pre-approval letter from a lender - which you should get - that will be as good as a cash offer. A drawback to cash is that the seller will think you have more to offer and will often counter higher. Regarding an offer, 10%-15% below listing price would get you laughed at two years ago, but not anymore. Worst they can say is no, and generally they will counter. Then you can decide what to do. An agent is going to disuade you from this. But they are required by state law to present the offer, and if they won't do it, you can call the listing agent directly to make an offer. A qualified buyer with cash is very valuable to agents these days, so don't take any crap from an agent who balks at your offers. Of course a nice house recently listed is not going to be open to low offers. But a seller who has been sitting for a long time and has less than a perfect house is going to be getting anxious, and their agent will probably be happy to get any offer at all.
Arnie, my experience with those lists (my wife is a Realtor) is that they are a waste. Every homeowner who is unlucky enough to appear on those lists is inundated with literally hundreds of letters and phone calls, and is typically in denial that they have a problem. Most often their financial situation is a mess, with second and third mortgages. And emotionally they are a wreck. Not the kind of thing that the average buyer wants to get involved with.
lowballing does not work. the bank will always bid up to either fairmarket value or what is owed against the house to protect their interests.