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November 17th, 2011 1:20 PM

Okay so today I was out with one of my first time homebuyers. We have been looking at foreclosed and short sale homes. Although the homes we viewed, both townhomes and single family homes needed a lot of work (mostly cosmetic-carpet, paint etc.) for the most part the homes were mechanically sound. Which means updated plumbing, heating and electrical.

The price range of these homes was between $40-$120k. Which is half of the price the homes were valued at 4 years ago. I call that a two for one.

When looking at short sale or foreclosed home make note of the following:

*Be sure to have your buyer get a professional home inspection. As a Realtor I have never sold a house without my buyer obtaining an inspection. It will not only give your buyer peace of mind. Let's face it there will be many unknowns about the property and you need a professional to help you determine if purchasing the home is a "good buy" or a "goodbye house".

*There will more than likely be multiple offers on the homes. There are a lot of investors seeking "flips" in this current market. And a lot of times cash is king. However, some sellers (banks) will require the listing agent to outline "highest and best" offer due by a certain day and time. Typically within the first 7-10 days the house is on the market. So be ready!

*Understand that most of the homes will not pass FHA financing due hazardous conditions (wiring, mold, missing handrails, lead based paint, water pressure etc.). So you will want to check with your lender to see if you qualify for a FHA 203k Rehab loan or Conventional financing.

NOTE-Don't buy an REO or Short Sale home without hiring a real estate agent with a successful track record. The agent must be combing the market everyday and be "on it" as soon as the listing hits the market. Once the offer is submitted to the Listing agent your agent will need to follow up weekly for updates. I ran into someone the other night at a networking meeting that has been waiting to hear if her offer submitted back in June was accepted. HELLO it is now November! And she has not heard word one from the Listing agent who is also the Buyers agent. Does that sound like urgency to you? No, I didn't think so. Typically the process will take 90-120 days. I actually had one approved and closed in 45 days, the offer was negotiated by an attorney on behalf of the lender.

*When looking at short sales keep in mind your timeline. If you are looking to close on a house in 30-60 days this might not be the route to go. It will depend on how many loans are on the house and the negotiating process. A foreclosure on the other hand can close as fast as your lender and title work is completed (generally 30 days). The approval from the bank can be literally the same day if not within 2-3 business days on a foreclosure.

Happy Buying and Selling!

Constance

Posted by Constance Koopman on November 17th, 2011 1:20 PMPost a Comment (0)