Pinetop White Mountain Blog

Good Evening Everyone,

So you want to buy a foreclosure property, it's a great deal right?  Well it can be under the right circumstances but you must be aware of some cold hard facts first. 

1) Are you ready to take on someone else's problems?  Because you are when you buy a foreclosure or short sale property.  For whatever reason the people who owned that property before you didn't want it anymore so they walked away and left it behind.  They probably left it behind with some major concerns as well, so beware!

2) Are you prepared to spend a good deal of your own money in to the property to make it liveable again?  You need to be because remember number 1), you are buying someone else problems.  There is a good chance that the home has been lived in "hard" and when the former owner made the decision to walk away from it, they property decide not to take very good care of it either.  There could be some major repairs that are needed to make the home nice again, and it could be expensive. 

3) If you are going to move on one of these properties you better be prepared to do a good deal of "Due Diligence" so you know what you are getting.  While your agent and your Title Company will help you with it, there are often hidden defects, liens that haven't been paid, and other issues that need to be discovered before you go to closing.  Too often with these Bank Owned properties there are unpaid bills out there floating around that may come back to haunt you after the sale.

4) You need to ask yourself, am I really getting the best deal for the money this is going to cost me?  Am I settling for less than I could have just because the price is somewhat lower than other homes in the neighborhood.  It is possible that the nicer place down the street for a bit more money could be the better investment.  If you bring all the values down by doing what you are doing it could hurt you in the future too. 

5) Okay so you have decided to move ahead anyway.  Maybe this is the best deal for you and  maybe you are prepared to do what it takes including the cash infusion to bring that home back up to the standards of others in the neighborhood, so what do you do now?

Find yourself a good buyer's agent who is familiar with this type of sale and can help guide you over the humps and bumps that inevitably come with this type of purchase.  Keep in mind, lenders are not too keen on lending on some other bank's foreclosure property and your lender is going to scrutinize every aspect of the transaction very very carefully. 

Your lender is going to want to be sure that not only can you afford the property but that the values in the neighborhood are going to hold steady in the future so they are willing to risk their money on this house.  They are going to watch everything very closely and there is no assurance even after you go through all the inspections, appraisals, and every other detail of a Real Estate transaction, that they are going to lend money on that home.  Appraisals are tight and money is tighter and banks are very cautious about lending these days anyway.  Add to that the fact that the property you want has already gone to foreclosure once, they are going to want some assurance that it isn't going to happen again.  

The point of this post is to help you be aware of some of the pitfalls of buying Bank Owned (REO) properties.  There are risks on the part of everyone; you, your lender, your agent, your inspectors, even your Title Company because there are no assurances about anything in the transaction.  The risk is all on the buyer's side and if the bank that owns the property can dump their problem on someone else without assuming any risk of their own, they are going to do it. 

You need guidance and you need to be sure you know where you stand and what you are taking on before you jump in to that sale.  Price isn't the only thing you need to be concerned about, there are a lot of other factors to consider.  So give us a call, let us help you decide if this is the right move for you.  If it is, let us help you find the right property at the right price.  If after looking around a bit you decide maybe this isn't the way you should go, let us help you find what you really want.  In today's real estate market you need the guidance of a professional to help you make good decision.  No one wants to see this current situation repeat itself ever again and we can help you avoid future problems by helping you over the humps and bumps in this kind of transaction. 

Give us a call.  Let us help you decide what is best for you.  Don't wait too long though because the market is picking up and the inventories are dropping, so the time is now to make your move.  There has never been a better time for First Time Home-buyers, Move-up or Move-down, or move across the Country Buyers.  The inventory is high, sellers are motivated to sell, and maybe one of those REO's is the right home for you.  Just call us and let us help you make that decision.  

- - - REMEMBER OUR MOTTO - - -

"WE WORK FOR YOU!"

SANDRA & BRUCE PAULOW, Your High Country REALTORS®