There are two apparently attractive options for buyers scoping out a good deal. One type is the “short sale,” where sellers have made an agreement with their lender to sell the home on the market for less than they still owe on the mortgage. The second type is the REO (bank-owned) home, which has fallen back into the hands of the lender after the sellers defaulted.
While these properties may be appealingly priced, buyers need patience and smarts to take proper advantage. If you’re considering a short sale purchase, focus on those with a price pre-approved by the lender. Otherwise, you may be wasting precious time in negotiations that may still ultimately fail.
Keep in mind that the house may have been vacant for some time and you’re going to be buying the property “As Is.” If you are lucky, you may find a foreclosure that has been protected by the Cash For Keys program, which offers the current (or former) owners a cash incentive to prevent them from neglecting or abusing the property before vacating it.
Before you even consider looking at a foreclosure, talk to your lender to see if they will allow you to purchase a home that is a foreclosure. Most lenders want the property to be in good condition with all the utilities turned on. Most foreclosures do not have all the utilities on and it’s very rare to find one in good condition.
And finally, don’t focus on the asking price alone. Location in a declining neighborhood or extreme maintenance and repair issues will eclipse any perceived value you would gain in a low price. Great homes are out there at great prices, but let your experienced real estate professional guide you through the potential pitfalls.
Contact the Kathy Henne Team RE/MAX FINEST by calling (937) 778-3961.