Buying a Pre-Foreclosure? What You Need to Know...
Making a short sale offer is not as cut and dry as homebuyers think. You need a good Realtor and a good attorney that has experience in handling short sales and foreclosures. There are many short sales arriving on the market daily and those homes that are in great shape go fast.
Some newbie home buyers take the job upon themselves thinking they will save commission money by not hiring a Realtor. Well, either way the commission is negotiated and paid. The Realtor that lists the home will recieve the commission whether you the Buyer has separate Realtor represenation or not. So get proper representation.
My single piece of advise to buyers looking to find a great deal is NOT to go it alone. There are steps to take and lingo that is spoken that the banks understand. So get a good Realtor and you will lessen your headaches and distress. By now, many banks have learned their way through the process from deals that they have had in the past.
The process is much smoother now but two things to remember are:
Do not low ball - banks will accept a fair market value price. Investigate the area well and run comparables of homes in the area and what they have "recently" sold for to offer a fair amount for the home.
Get pre-approved for a loan. Some buyers think they can get away with offering $5-$10K to the bank on home that clearly has value and is in a great area. The bank will do one thing with that offer - just toss it in the garbage. The homeseller is already in distress and owes the bank $xx amount of dollars on the note. The banks are willing to work with the seller on short sale quickly to avoid the long and costly foreclosure process. Also FHA will NOT secure any loans for distressed properties with a lot of work, it has to be livable. In these cases where repairs will exceed $6K+ your loan officer may suggest a 203k loan.
Steps for finding a great a pre-foreclosure and making an offer:
1. Get a pre-approval from a bank or your credit union. Sometimes the rates will be lower if you alrady have an extablished relationship with your local neighborhood bank or credit union versus a national bank chain. It takes approximately 3-4 weeks for banks to process a new loan approval. No one wants to accept contingencies on sales or loan approval. They want to get the home sold as quickly as possible and close in 30-45 days or less.
2. Have your Realtor take you on a tour of pre-foreclosure homes and regular sale homes.
3. With your Realtor, examine the home of interest thoroughly, the neighborhood & condition of home.
4. Once you have decided on a home, have your Realtor run comparables of the "same" type and condition of homes in that area to decide on a fair and reasonable price for making an offer.
5. Some of the homes may be vacant so arrange for a pre-inspection. You want to know if there are any issues with major items like utilities (furnace) , roof, structural damage, termites, frozen water lines, mold or radon. A thorough home inspection will reveal any major issues.
6. Present your offer to the Realtor representing the Seller. First, the homeowner or owners representative has to accept the contract price. Once signed it will then go to the bank that holds the note for acceptance/approval.
7. Next the offer goes to the bank for approval signature. Both Seller and bank holding the note have to sign off on the contract offer as well as the homeowner. Make sure to give them a timeline for response otherwise you may wait weeks or even months for a response. I suggest 3 business days.
8. Once the contract has been accepted and executed by all parties, have your attorney review and perform due diligence and thorough lien & title search and set a close date.
9. Once at closing table, you must have cash or certified funds in-hand and ready to make the deal happen.
10. Closing day - you get the keys, now it's time to reap the rewards of owning your own home!
Many deals are out there you just have to "hunt" for them! Happy house hunting!
Christine Moscinski is a Broker Associate and member of "The House Hunters" Team at Gobber - GMAC Real Estate and consults: New and Seasoned Buyers & Sellers in Metro Chicago and Western Suburbs: Single Family Homes - Townhomes - Condos - Luxury Rentals - REO's - New Construction More information can be found on her website at http://www.eHouseHuntOnline.com or on Facebook at http://www.facebook.com/home.php#/profile.php?id=715944111&ref=profile