People ask me about foreclosures a lot. Since I am a Realtor, I don’t find this a strange question at all. Over the last couple decades the U.S. has seen a huge increase in the number of foreclosures that hit the market. People have taken note, and eventually figured out that it is possible to get a really good deal when buying a foreclosure. Buying a foreclosure in Louisville or in any other city for that matter can be a little trickier than a traditional sale, however, and that’s where the questions roll in. So, I figured I would address a few questions that people have asked me about buying foreclosures.
- “My friend got a great deal buying a foreclosure. She bought a $200,000 house for $100,000” –What? Who says it’s a $200,000 house? If it was a $200,000 house it would have sold for $200,000. I promise you that person did not get 50% off of the home’s value. That doesn’t happen. Depending on the condition of the home, a foreclosure will often be priced a bit below the market value for a quick sale anyway. After all, banks don’t like to own homes. That’s not what banks do, so they want to get rid of the homes they repossess fairly quickly. Now, if the person in the example above bought a foreclosure for $100,000 in a neighborhood full of $200,000 homes, then they could probably put some money into it and make it a $200,000 home.
- “I have heard that foreclosures take a long time to buy. Is it worth the trouble?” — Actually, foreclosures can and often do close in a reasonable time frame. Every bank is a bit different in how they handle their assets, so you can typically expect to sign a few extra documents, or pay an extra $125 at closing to have the home re-keyed. If you have spoken to someone that had a hard time buying a foreclosure, they probably used a real estate agent that was unfamiliar with the process. As I said, these things are tricky. Not for you, the buyer, but for me, the Realtor. If you have a good Realtor on your side then you won’t even know about the extra work it takes to close a foreclosure, because your agent bears the brunt. This is why HUD and Fannie Mae / Freddie Mac won’t even let you bid on a foreclosure property without an agent.
- “I keep getting outbid on every foreclosure I try to buy. How can I ever win a bid?” — Um, either get a new Realtor or take a dose of reality. If you are constantly under-bidding on properties you will never get a home, and your Realtor should tell you that. As I said above, a lot of times these banks price their homes aggressively so that they sell quickly. Yes, sometimes there are bank owned foreclosures that will sit on the market for a little longer than others, but that probably means that the home needs a LOT more work than people are willing to do. In those instances you can possibly “steal” the house, but chances are, you don’t want that house.
So, here’s how you buy a foreclosure property: hire a great local Realtor that has successfully navigated through the foreclosure process many times before. You need to know what other homes are selling for (which is the job of your Realtor). You need to know what a competitive offer will be so that you can contend with all the other people that are trying to get a good deal (which is also your Realtor’s job). Believe it or not, you’re not the only person trying to find a great home for a low price, and that’s why you need help.
If you have questions about foreclosures you can email me at firstname.lastname@example.org.
If you want to get the home buying process started, call me at 502.509.9278.
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