If you’re a real estate agent in Bend, Oregon, you know that the foreclosure market is one of the few areas seeing significant interest right now. In many housing markets around the country, this is accurate. Despite the slow sales in other parts of the real estate market, it is not uncommon for these houses to receive several offers.
My first-time homebuyer clients recently outbid 15 other parties with an offer I drafted on their behalf. That’s a lot of interest for one property, but it shows that the real estate market isn’t as slow as it might look at first glance.
FORECLOSED PROPERTY: THINGS TO THINK ABOUT
Many people were interested in purchasing foreclosed properties because of the low pricing. Many potential purchasers are understandably wary of buying a bank-owned property. In most cases, the bank will cover the cost of any outstanding liens on the property and the real estate commission and escrow fee. Buying a bank-owned property typically does not involve any out-of-pocket costs for the buyer.
The most important thing for buyers to remember when purchasing an REO (Real Estate Owned) property is that, in most cases, they are buying the foreclosure “As Is,” meaning that the bank makes no guarantees about the property’s condition and offers no warranties against defects in the structure.
THINGS TO KNOW BEFORE BUYING A FORECLOSURE
One piece of advice: never buy a foreclosed home at auction. This is because the property you purchase does not allow for inspections or viewings before closing. If you believe in a home and then uncover hidden flaws, you won’t be able to get your money back or hold the seller responsible.
The second advice is to research nearby properties similar to the one you want to buy. You’ll find out how much comparable properties in the area are selling for, which ones aren’t, why, and what pricing patterns are now at play. The easiest way to find comparables is to work with a professional Realtor who can supply you with up-to-date data.
Financial planning is step three. Banks that own foreclosed homes will not even consider your offer unless you have already been pre-approved for a loan. Finding the perfect house is heartbreaking, only to lose out to another buyer who already has finance in place. Keep in mind that cash is king in the eyes of financial institutions. The bank will likely choose the all-cash offer, even if it’s for a larger purchase price than the one from a buyer paying with conventional financing.
Once you’ve found a promising candidate, have a professional house Inspector inspect to assist in alleviating any anxieties or reservations about purchasing a foreclosed house. Banks may occasionally be willing to provide repairs or replacements to a home if the issues are significant enough.
In one recent foreclosure I helped clients with, the water was turned on for the inspection, and it was discovered that the Hot Water Tank was leaking. My clients saved about $600 because I could negotiate to have the tank replaced even though the bank was selling the house “As Is.” Although not all financial institutions are amenable to this, how you approach them can determine whether or not you get a positive response.
Fifth Piece of Advice: Buying a home warranty at the time of sale can provide additional protection against physical faults of the property, such as a roof leak, appliance breakdown, electrical issues, and plumbing problems. The average price range is from $400 to $600. However, this can vary greatly depending on the coverage level and duration of your warranty. If you purchase a home warranty, you should carefully study the policy’s coverage details to determine what is and is not included.
You will have the same rights as any other homeowner once you have inspected the property and finalized the sale. To safeguard yourself financially in the event of a problem with the property’s title transfer, it is strongly recommended that you obtain Title Insurance before closing with an Escrow company.
When buying a property that the bank has repossessed, it’s a good idea to consider getting an Extended Policy Coverage in case a previous owner places any liens on the property. You should not expect assistance from the bank you used to purchase the home if subsequent liens are filed against the property. Extended Policy Coverage on your Title Insurance could be a good idea since, while unlikely, it is possible. Talk to your Title and Escrow Officer about your alternatives and find out precisely what is and isn’t covered by their insurance.
Currently, the most significant issue most purchasers have with Foreclosures is getting enough information about them to submit an offer on a foreclosed home of interest promptly. Many of these homes reportedly receive offers just hours or days after being put up for sale.
Seventh Piece of Advice: If you don’t want to be left behind in the race to find and acquire a foreclosed property, it’s in your best interest to retain the services of a professional and trusted Real Estate Broker.
Tarris Rogers is a real estate broker in the Bend and Central Oregon area with over 14 years of expertise helping purchasers find and purchase bank-owned properties. Sign up for his FREE BEND FORECLOSURES Hotlist, and you’ll be the first to know when a new Bank Repo becomes available.
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