Real Estate Basics: How to Buy a Foreclosure
The recent downturn in the economy and housing market has left many homes on the verge of foreclosure. Many have already lost their home, and the evidence can be seen on every block in every neighborhood. Vacant, foreclosed homes can be found everywhere. If you’ve ever wanted to buy a foreclosure, now is the time to do it. You can literally find any type of house you want, and the competition is low due to the prevalence of foreclosures.
There are several different ways to buy foreclosures. Or should I say, there are several different times that you can buy foreclosures. The foreclosure process is a slow one, and there are money-saving ways that you can buy a home each step of the way. The following are three phases during which you can buy a foreclosure:
Pre-foreclosure – The pre-foreclosure phase is a time during which the homeowner still has control of the home. The foreclosure process has begun, but the homeowner still can avoid it by selling the home or forking up some cash for past due payments.
Auction – The auction phase of foreclosure is just what it sounds like. This is when the foreclosed home is sold for a fraction of what it’s worth on the auction block.
Bank Owned – After a foreclosure occurs, the bank that financed the home can take control of the house and sell it.
There are benefits and drawbacks of each type of transaction. Below we will talk about each type of transaction and see how they differ from one another. We will also talk about how you can start the process of buying a foreclosure in each of these stages.
Pre-foreclosure Phase
Buying a home during the pre-foreclosure phase involves a lot of legwork. First, you have to find out who is in a pre-foreclosure state. You can do this by obtaining a list from a pre-foreclosure listing agent, a bank or from some other government entity such as HUD (housing and urban development). Once you obtain the list, you will have to approach home owners individually and make an offer.
Buying during the pre-foreclosure phase allows you to purchase a home for well under what it’s worth. Many times the homeowner will let the home go for what they owe on it. You can also perform inspections, apply for mortgages and proceed with the transaction much like you would any other real estate transaction.
Auction Phase
Real estate auctions are posted in local newspapers before they occur. To buy a foreclosed home at auction, all you need to do is be present at the auction and place the winning bid.
Buying a house at auction is the cheapest way to buy a foreclosure, but there are some drawbacks. You will have to have a substantial down payment (20 to 30%), and you will need to pay off the remaining balance within a short amount of time, usually 30 to 60 days. There is also no opportunity to have a home inspection performed. All sales are AS IS.
Bank Owned Phase
Buying a foreclosure during the bank owned phase is much like buying a home any other time. Savings at this phase can be substantial but are not as great as they are during the pre-foreclosure and auction phase. To purchase a bank owned home, you will need to contact a real estate agent or the bank owning the home. The transaction will proceed just like a regular real estate transaction.
As you can see, there are benefits and drawbacks of each strategy. Buying a foreclosure can be stressful, especially if you buy during the pre-foreclosure phase. Auctions attract a lot of competition; so there is no guarantee that you will be able to “win” the home. With all of the variables that come along with buying a foreclosure, is it really worth it?
The answer is a resounding YES! At no other time can you save as much money as you can when you buy foreclosures. In many cases you can purchase a home for up to 50% less than what it’s worth. This equals instant equity and a strong foundation for the future. Who wouldn’t want to buy a foreclosure?
I buy Houses and Self Storage Investing
Categories: Foreclosures Tags: Buying A Home, Foreclosed Home, Foreclosure Listing
Arizona Pre-Foreclosures, Foreclosures, and Short Sales
There is a high inventory of homes on the market in Phoenix, Arizona. Right now may be an excellent time to buy, not such a good time to sell. Sellers and builders are offering wonderful incentives to buyers. It has become slightly more difficult to obtain a home loan due to the high foreclosure rate. Lenders have been tightening their standards due to the high foreclosure rate. This article discusses foreclosures, pre-foreclosures, and short sales. At any time while reading this article, please feel free to click on the website associated with this article to get in contact with a professional Realtor in Arizona to help you with all of your Arizona Real Estate needs.
Whom ever people are making their mortgage payments to are the ones taking the hardest hit when a home goes into foreclosure. When a home is in foreclosure, it means that the home owner has stopped making their house payments. When this happens, the bank is forced to foreclose on the home and re-claim the home. Once they re-claim the home they want to get rid of the home. To get rid of the home, the bank must sell the home at fair market value for the home to have any chance at selling. If the fair market value is less than the amount owed on the home, the bank is going to take a loss because they loaned the home owner more money than the home is currently worth. If the home had any equity at all, the home owner probably would not have had to foreclose because they could have refinanced the home to take money out to pay the mortgage payments.
Lists are distributed to Realtors that are in pre-foreclosure, which means, the people are on these lists are late making their house payment, and have a possibility of going into foreclosure. This is a touchy subject to the people that are making their house payment late. There are multiple reasons why someone would stop making their house payments. Usually, the people that stop making their payments on their home are not doing it by choice, but out of necessity. However, you may be helping someone by an investor or home buyer purchasing a home in pre-foreclosure. If you can not afford the home any more, perhaps someone will purchase the home for you so you do not have to make the payments anymore.
If the home owner that went into foreclosure owes three hundred thousand dollars on a home, and other similar homes in the area are now selling for two hundred and thirty thousand, the bank is going to take a loss. This is a good time to get a home at fair market value, or possibly less. When the bank forecloses on a home, they own the home at this point. The bank acts as the seller, and the buyer and the buyers Realtor are now negotiating on a price with the bank. If no better offers are coming through the door, the bank may take your low offer.
When a property is in pre-foreclosure may be a beneficial time for someone to purchase a home. That is, if the property that is in pre-foreclosure has some equity. If the homes in the area are selling for three hundred thousand dollars, and the person that is in pre-foreclosure owes two hundred and thirty thousand dollars on the home, a good purchase price would be two hundred and thirty thousand dollars, or maybe two hundred and forty thousand. If a similar floor plan just sold in the area for three hundred thousand dollars, then this would be a wonderful buy because you just picked up some equity. Sometimes a Realtor will represent the bank and act on the banks behalf and negotiate a list price for the home. The bank is asking for a Realtor to sell this home at fair market value. This way, the bank can continue banking, the Realtor can try to get the property sold, and the homeowner can possibly get out of their mortgage once the house sells. This is a winning situation for the buyer, the bank, the homeowner, and the Realtors.
However, it is common when the seller owes more than the home is worth, then, the bank will ask the Realtor to price it to sell. When a bank tells a Realtor this in this hypothetical situation, the Realtor will have to price it lower than the surrounding competition in order for the home to sell. This is called a short sale.
A short sale is good for the buyer, better than nothing for the bank, and an act of desperation by the seller. It is good for the seller because they will get out of paying their mortgage payment if the house sells, but generally has a negative effect on the sellers credit rating. A bank will not negotiate with the seller on a short sale unless the seller is not making their house payments. This will have a detrimental effect on the sellers credit rating.
This does not guarantee that market conditions could get worse. Home values may drop any time, so this is a risk a home buyer or investor needs to contemplate. If the interest rates are dropping, and the market seems to be heading upwards, this might be a great investment. There is no way to predict market conditions, what goes up may very well come down. None of the information in this article will guarantee any type of return on your investment. When buying, selling, or leasing property in Arizona, it is imperative that you are properly represented so that you know what you are getting your self into. To get in contact with an honest, experienced, and proven Realtor, please click on the website partnered with this article. Arizona welcomes you.
By: Nick McConnell
About the Author:
Nick McConnell
Executive Sales Associate for Coldwell Banker Residential Brokerage in Scottsdale, Arizona. Lived in Arizona all his life, Graduated from Northern Arizona State University and has been a Realtor ever since.
Categories: Foreclosures Tags: Arizona Real Estate, Good Time, Home Loan
Reasons For Countrywide Bank Foreclosures
Foreclosures have always been a serious problem for most homeowners and lenders which results in the cumbersome process of loan recovery through auction sale. Countrywide Bank Foreclosures are on the rise which is a result of various factors like divorce, unemployment, financial crisis and rising interest rates. The Homeowners are defaulting rapidly owing to the financial crunch and ever increasing rates which have led the Countrywide Bank Foreclosures.
All states of U.S. are experiencing this crunch and the crisis has made most banks cautious. Banks have started foreclosing loans early as they feel the defaults shall make their interest calculation unstable and the decreasing property prices due to fast sell-offs by other institutions are a growing concern for liquidity.
The main reason is financial crunch for most borrowers which make their payment capacity squeeze and result in default. Other reasons include divorce which is a problem aced by most U.S. residents as the property lies in joint name and either borrower does not want to take the responsibility of the burden to be paid back. The leading financial crisis and the tumbling bond and equity markets have further impacted the liquidity flow in the system which has eroded most wealth put in the financial markets by borrowers.
The process for foreclosure starts when the borrower after repeated reminder from the lender fails to pay off the loan and the lender is left with no option than to mortgage the property and sell it in an auction. The borrower not only looses his house but also financial credibility which makes him blacklisted and unable to draw credit from any other financial institution for several years. The auction process in Countrywide Bank Foreclosures follow the normal auction rule and bidders are required to participate and bid for the property. The highest bidder is declared the owner. The owner has to pay 10% of the price immediately and the remaining in 1 month’s period. In some cases a temporary agreement is done with the fresh owner and the borrower is given time to repay the loan.
Buying a property in a bank foreclosure is by far the safest means of investing in real estate but some precautions should be taken by the buyers in order to have a safe investment. The buyers should check for the actual price of the property from the neighborhood and state agencies and check for the condition of the property whether it requires some repair and renovation work. Further the buyer should check for any liens or liabilities on the property which shall be transferred to him as the actual price of the property could be only estimated by calculating these costs.
Many websites are featuring Countrywide Bank foreclosures which have made it easier for the buyers to opt for the most appropriate real estate in their area and compare the prices with other options to choose the best Countrywide Bank Foreclosures.
By: Kevin Simpson
About the Author:
Search foreclosures by state or get more information on Bank foreclosures at Foreclosure1.com.
Categories: Foreclosures Tags: Liquidity, Reminder, Squeeze
