FORECLOSURES
A foreclosing is a legal procedure that bars a mortgagor’s (owner) from keeping his or her property when payments are delinquent. (A borrowers failure to make mortgage payments when they are due). It allows the bank or a lender to recover the amount owed on a defaulted loan by taking ownership of the property; or by selling the property. Sub prime borrowers have adjustable-rate mortgages and when these loans reset, homeowners have a choice of higher payments, or refinancing. Many of these loans are facing reset in 2008 hence the rise in Notices of default (NODs) and foreclosures.
With so many foreclosures and short sales on the market today some agents are giving foreclosure tours by bus. It’s a chance for buyers to see what is out there in any given neighborhood. Thousands of people have been shut out of the housing market in recent years however, bank owned homes seem to be the only way to buy a home. But, there is a term in real estate “Caveat Emptor” which means ‘Let the buyer beware’. These bank-owned homes are sold "as is”, and often times
So if you're thinking now is the time I should buy a bank-owned property, here are some things to consider:
1) Many banks list foreclosed homes on their Web sites. Most of those homes will also be listed with a real estate agent.
2) Get preapproved by a qualified lender. Many banks won't even consider your offer unless you have got a lender's OK.
3) Consider hiring a real estate agent to negotiate the deal rather than dealing directly with a bank yourself. Find an agent with experience in bank-owned properties.
4) If the listing is relatively new, the bank may not knock much off the asking price. You'll have greater bargaining room with listings that have been sitting longer.
5) Don't expect to lowball the price and get the house. Most bank-owned houses sell within 10 percent to 20 percent of the listing price.
6) Be patient. It may take longer than a traditional home sale to get a response to your offer. And banks don't respond during the weekend.
7) Know what you're buying: Most bank-owned homes are sold "as is." Usually, the bank will not pay for repairs, upgrades or home inspections. Look carefully for damages or lack of home maintenance.
8) The bank calls the shots. The sales contract may omit customary real estate terms or include others you are not familiar with. Once the bank accepts your offer, it's usually final.
Source: Bee research
Buyer needs is to be approved by a reliable lender, and just as some real estate agents will not take you out to look at homes unless you have been approved for a loan, banks will not consider you as a possible canidate unless you have loan approval.
Also, Check comparable prices in the the neighborhood of your choice just to make sure that you are not paying more that you should. Bank-owned homes usually sell within the listing price.
Please make sure you have enough funds on hand to cover repairs,closing costs, inspections and things miscellanous because in most cases these homes are distressed. Carpets are soiled, flooring and windows are damaged, electrical fixtures and appliances are often missing and a host of other problems that need to be fixed at your expense.
Banks do not accept offers contingent on you selling another house.
Above all, be patient and be prepared to hit the ground running once the bank accepts your offer. Try not to delay the process because banks will charge a daily fee for extending escrow beyond the orginal set date.