The housing market is stabilizing and prices are increasing, especially in the Seattle area. Though there may be less foreclosed properties out there, they are still available. Some experts say the foreclosure crisis is actually far from over.
Purchasing a foreclosed property is not the same as purchasing a regular
The main differences between a foreclosure and a traditional home purchase are that:
These are the first two things you should do and they should happen within a very short time of each other. Find a broker that is working directly with banks in possession of foreclosed properties. Do this at the same time you are interviewing lenders and getting a pre-approval letter. While you are doing this you can even use search engines that show foreclosed properties. Look for the letters REO this means Real Estate Owned (owned by
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Instead of using your internet searching to find a home use it as a way to find a broker. Banks usually hire a handful of brokers to handle their properties in a market. In most foreclosure sales the buyer will work with the bank’s broker instead of a buyer’s agent. This saves money on commission costs. Many of these brokers have a
If you are planning to take out a loan for the home you will need a pre-approval letter from a lender. This letter shows the bank that owns the home proof of how much money you will be able to borrow based on the assessment the lender conducted of your financial health.
Don’t wait to find the home first because a bank will not entertain your offer without this letter. It is not uncommon for foreclosure buyers to think that the bank that owns the home will finance the new purchase. The people in the REO department look at it as a completely separate transaction they are only interested in getting the homes off the bank books and as quickly as possible.
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There is no set formula
Look at the absorption rate for your product class. This means find the rate that comparable houses are selling. If comparable homes are selling swiftly it is best to come in
In nearly every foreclosure sale the home is sold as-is. A home that is priced well and competitive to comps will sell for that price regardless of condition. Don’t go through inspection and expect to come back to the bank asking to lower the price because of needed work. This is one of the biggest differences from a traditional sale.
An inspection is done so that you can decide if you want to take on the repairs. It is good to get to know people in the construction business at this point.
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