What to know when buying a foreclosure or bank owned home in Colorado Springs
Buying a foreclosure or bank owned home often is appealing to buyers trying to stretch their dollars. It’s finding a good one can that can be a challenge. Many banks don't want to advertise their homes negatively as "bank-owned" because they don't want to scare off potential buyers.
In some markets, foreclosure inventory is actually down compared with last year as government programs attempt to keep owners in their homes and banks aren’t putting as many homes on the market, Melvin said. That’s making it harder for buyers to snag a foreclosure, and those paying with cash often win a bid over someone who needs financing.
If you’re considering the purchase of a home that is now owned by a bank, it’s also important to know at the outset just how much work you’re in for — and how much it is going to cost you. Many foreclosures are in various states of disrepair; some of the fixes are cosmetic, but some can be extensive.
Those looking for the best deal probably shouldn’t rule out non-foreclosure properties. If buyers set their sights on bank-owned properties they may be in for a surprise as many need a lot of work and sweat equity. Finding a fairly decent foreclosure property with minor work (such as carpet and paint) is not easy to find and when you do find one, expect a buyer frenzy!
An option for finding some of the foreclosure listings is to go straight to the bank.
Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties the financial institution has reclaimed when borrowers defaulted. To find a list, simply do a Web search for REOs and the name of the lender. Contact information for the property’s listing agents is usually provided for each entry.
For a fee, other sites will hunt down properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 per month and lets people search just for REOs.
Foreclosures.com charges $49.95 per month, after a free seven-day trial.
Otherwise, you might want to enlist the help of a really good Realtor (like me!). Someone who works regularly with home buyers searching for the right home to buy in the right area, at a price you can afford.
Something else to consider is the face that lenders aren’t held to the same disclosure requirements as sellers who have lived in the home, mainly because the lender hasn’t occupied the home to notice leaks or other problems. For that reason, an inspection is crucial.
“If there are lessons out of the last couple of years, it’s certainly buyer beware,” said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa, Fla.
“We have all heard the stories of people ripping the copper pipe and wiring out … people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall,” Steward said. Some have ripped out toilets and kicked in walls or left water faucets running before they left the house, often out of anger.
You don’t need to be told the toilet is gone, but an inspector can tell if there is damage 20 feet down the water line because of the way that toilet was ripped out, he said.
Other issues could pop up due to the property being vacant. Large banks will often hire a field service to cut the grass, shovel the snow and winterize a home, yet when homes aren’t occupied it’s harder to catch small problems before they become big ones.
When a place is unoccupied, pests could become an issue. If you were living in a home, a nest of raccoons probably wouldn’t be able to find a home in your crawlspace—not for long, anyway.
The time it takes to complete the sale can vary from lender to lender. In some cases, the process goes smoothly and in other cases, the lenders are disorganized. It depends on who you're trying to do business with!
Your best chance at having an offer accepted and for a quick closing process is to have everything in order before making the offer. That includes having the financing firmed up and writing a clean offer (not asking for new faucets or doorknobs, etc) so that the bank doesn't think you are going to be a pain that they don't have the time for. Most bank-owned properties are sold “as is,” so if there is something you want fixed, it’s best to just factor that into the price you’re offering.
But don’t expect to bargain the listing price way down because banks typically price their properties at a 20 percent to 30 percent discount. If the property has been on the market for a week or two, don’t expect the bank to drop the price; if the listing is older, you might have more power.
Also, don’t be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don’t have to take the loan from their company, but they may want to get a closer look at your finances to make sure you’re a solid buyer.
If you would like more information on how to buy a home now, especially if you are a new home buyer (haven't purchased or sold in the last 3 yrs) and want to take advantage of the $8,000 tax credit, then contact me today for more information. I promise to give you exceptional customer service, answer any questions you may have and make sure you get the house of your dreams that you can afford. Call or email me today at: 719-229-5770 or email Juanita@JuanitaSimkins.com
I'm looking forward to helping you!