Bank owned properties made up
18.6 % real estate transactions in 2008.
In this economy, foreclosures can be very appealing to buyers with their
advertised low prices.
There are two major factors that set apart a traditional
transaction and a foreclosure: the seller (who is the bank in a foreclosure)
and the timeframe. A short sale is a
similar process- the property is sold for less than what is owed on it to
prevent a foreclosure from happening.
The sellers for foreclosures or short sales may require a
lot more information from a buyer including documentation of their finances, a larger
earnest money amount, more money in reserves & a pre-approval letter from
their lender. Foreclosures, especially
short sales, generally take longer to close than a traditional deal. Buyers must have patience; in our experience
it may take up to 6 months to get approval or denial on a short sale.
A buyer also needs to be aware that sellers usually don’t
have to provide a Seller’s Disclosure with a foreclosed property, buyers must
be aware they are purchasing property as-is.
Many foreclosed properties will need repairs; buyers may want to have
additional funds set aside to cover these costs.
Here are a series of questions to ask yourself if you’re ready
to buy a foreclosure written by Regina Ludes, an associate editor for The Residential Specialist:
Have you bought a foreclosed or short
sale property before? If so, you know what to expect. If not, call Davis County
Realtors & we’ll explain the process to you.
Is this a primary residence or an
investment? If it’s a primary residence, you may be more
emotionally vested in the outcome.
Investors can walk away from the deal more easily if it doesn’t
work out.
If this is a primary residence, when
do you need to move into the home? Foreclosure transactions can take longer
than most sales transactions, and buyers must allow for making
repairs. If the buyer needs to move
soon, they might need to make temporary living arrangements or find a more
suitable home.
Do you have financing available? Get a
pre-approval letter from your lender to show you have the funds ready to
purchase the property.
Are you prepared to make repairs? Many
foreclosures need repairs. If
you’re looking for something move-in ready you may be better off shopping
for another property.
Ludes,
Regina.
“High Tide” The Residential Specialist Jan.-Feb. 2009:
12-13.
