Buying A Foreclosed House
Buying a foreclosed home is a little different from buying a typical resale.
In many cases, only one real estate agent is involved. The seller wants a preapproval letter from a lender before accepting an offer. There often is little, if any, room for negotiation. The home comes as is, and it's up to the buyer to pay for repairs.
On the upside, most bank-owned homes are vacant, which can speed up the process of moving in.
"Buying a foreclosure is definitely a bit of a grind. It's not easy," says Robert Jenson, owner and founder of the Jenson Group at RE/MAX Central in Las Vegas. "You're getting fantastic pricing, but sometimes it takes going through a lot of houses and writing a lot of offers to get the home you want."
In Jenson's stomping grounds of Las Vegas and surrounding Clark County, the housing bust hit hard, and upward of 80 percent of homes sold are "distressed properties" -- foreclosures and short sales. (A short sale happens when the lender agrees to let the owner sell the house for less than the amount owed because the owner can't afford the monthly payments.)
Nationwide, about one-third of sales in May were of distressed properties. A big chunk of those sales went to first-time buyers, according to Lawrence Yun, chief economist for the National Association of Realtors. "First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales," Yun says.
When you buy a foreclosed home, you're cashing in on a home someone was no longer able to pay for. Foreclosures are difficult--both to locate and to execute the transactions--but the potential to turn them over for a tidy profit may be there.
Foreclosure on a mortgage can happen for many reasons, including the lender losing his job or the untimely death of the lender. Foreclosing involves specific knowledge by the lender and precise steps to make sure it is done right. Nothing can be done on a foreclosure until the lender has defaulted on the loan.
