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What to Remember When Buying a Foreclosed Property! #forclosures #housingmarket #housing #realestate #oregon
REO sales are down by 80 percent from their peak six years ago, but there are still plenty of affordable buying opportunities for homebuyers, according to acommentary by Chris Bowden, Freddie Mac's SVP ofHomeSteps, the GSE's real estate sales unit.
About 6 percent of all residential home sales in June 2015 were REO sales, compared with their January 2009 peak of 27.6 percent, according to the latest data from CoreLogic, a decline of about 80 percent. Today's low mortgage rates, which are hovering around 4 percent, provide more opportunities for investors and other buyers seeking an affordable home option. Bowden reminds potential buyers that while buying an REO property is very similar to buying any other house, there are four tips to remember:
Find a reputable agent. It will be helpful to find a reputable agent who works actively in the neighborhoods where you are looking to buy a home. Though banks will negotiate, they often employ local pricing strategies with the goal of selling homes for as close to fair market value as possible. A good agent will help a buyer find an affordable home and put in a solid offer, Bowen writes.
Get pre-approved. It is a good idea to get pre-approved for a mortgage loan by your lender before you begin searching for a home, according to Bowden. It is also a good idea to understand what you can afford before you find an REO home you can't live without, especially since REO homes are purchased "as is." While banks will cover the costs of some necessary repairs, many REO homes will need addition renovation or repair costs that the banks will not cover. The buyer should consider these costs when figuring in how much they can afford, Bowden said.
Be ready. Since the buyer will likely be competing against investors and several other interested parties, it will be crucial to move fast in making an offer, especially with cash offers. Bowden says the good news for those buying REO homes is that the market is shifting back to traditional homebuyers after years of being dominated by investors and cash sales immediately following the crisis.
Due diligence. Home inspections are critical for any home purchase, but especially when buying an REO home, since the buyer is purchasing the home "as is" and it is important to check the home for safety hazards or other unknown issues, Bowden said. If issues are discovered during an inspection, the buyer can always cancel the contract.