Buying Foreclosures

Since Visalia is now more of a buyer's market because of the many foreclosures, also known as REOs and bank-owned properties, buyers have opportunities that have not been available to them for several years. Low prices, low interest rates, and lots of properties to choose from - it's a buyer's dream.

When looking to purchase a property that will meet your short-term and long-term goals while staying within your budget, it is important to determine if purchasing a foreclosure is right for you. Some buyers I have worked with asked to look at foreclosures because they wanted "the best deal." After taking the time to learn their needs, goals, and financial situation, I would then help them look for the best deal that would also be the "best fit." Sometimes the better deal was a foreclosure, and sometimes it was a well-cared for, non-foreclosure residence.

THINGS TO CONSIDER WHEN DECIDING IF A FORECLOSURE IS THE BEST FIT FOR YOU

1.   Look before you leap.
      Examine your financial situation before you start looking. How much money do
      you have to invest in improvements for a home? Where will the money come
      from? Savings, credit, or your monthly budget? Determine if you can afford to
      buy a foreclosure.
 

2.  Show me the money.
     
The bank selling the home requires evidence of your ability to pay for the home:
     A pre-approval letter for the amount financed and evidence of funds for the
     down payment and closing costs, or for the full amount if you are paying cash
     for the property. 

     The banks love cash buyers because that often means they won't be asked for
     as many concessions and because there is no loan involved and no property
     conditions required by the loan or the appraiser. 

     Buyers who are getting home financing must restrict their purchase to
     properties that conform to the loan guidelines and that pass the appraiser's
     inspection. This means that certain properties may not be in a condition good
     enough to be purchased with certain loans - or possibly any loan. Keep in
     mind, the bank is selling the property in an as-is condition and may not be
     willing to pay for - or even allow you, the buyer, to pay for - repairs to be
     done to conform the property to meet the requirements. 

     Don't let this discourage you though. In our current market their are many
    
foreclosures that are in good enough condition for you to purchase with a
     loan.

3.  Count the cost.
     Once you find the property you want, make sure you calculate the costs of
     repairs, especially for any big-ticket items such as a new roof or A/C and
     heating.

4.  Avoid buying the money pit.
     The bank, unlike a "regular seller," has never resided in the property and
     cannot tell you anything about it. Inspections help to eliminate the element of
     surprise when it comes to making home improvements, so you don't end up
     owning a money pit. 

5.  When average is no longer average.
     
Average homes in average condition make better rentals than luxury homes
     when factoring in maintenance costs. So if you are handy, you could pick up
     a good property that just needs a little sweat equity, yielding you better cash
     flow.   

6.  
Out of time.
     
Many people live very busy lives and just don't have the time to make
     necessary home repairs. This applies not only to foreclosures but to other
     fixer-uppers as well. It is better to know your limitations before you buy.

7.  Let's Make A Deal!
     
Often foreclosures/REOs are left in need of repair, which can mean more
     leverage when negotiating price. Of course, the banks are not giving homes
     away, so keep that in mind when making offers. 

     Often buyers are surprised to find that some foreclosures are priced very
     aggressively - under market value - generating a lot of buyer interest and
     therefore getting multiple above-price offers.  

8.  For rent.
     
There are plenty of potential renters out there who have been displaced
     after losing their homes as a result of short sales and foreclosures. These
     folks need affordable homes to live in. Investors have a great opportunity to
     partake in win-win situations for themselves, the bank, and the renter.

If you are interested in learning more about purchasing a bank-owned property, or you are ready to start looking at foreclosure homes, please contact me. In addition to our traditional listings, RE/MAX Visalia has a large market share of the foreclosure properties in Visalia. We know what makes for a successful purchase of a foreclosure, whether it is one of our listings or one of another agency's.