Oppurtunities in Real Estate

The inventory of real estate for today’s home buyer is staggering. With a little insight and good advice, your dream home maybe more attainable than you know. There are four opportunities I will touch on over the next few days: Foreclosures, Relocation, Short Sales, and Stale listings.

Foreclosures
Nationally, foreclosures are on the rise, thus banks are becoming home owners more and more. This is the last thing they want. As a result they will liquidate these properties for a low price. Sounds like easy pickings, right? Well yes and no.
You will find that most homes are in need of repair and usually the list price takes this into account. This low list price brings out many investors, so a bidding war can result. When formulating a price strategy, determine what the home would sell for if the repairs were made and subtract the cost of repairs from that number, not the list price. For example: Let’s say you are considering a foreclosed home listed at $170,000 and needs an estimated $20,000 in repair and improvements to bring it up to the neighborhood norms. If the neighborhood has a recent sales history of $200,000 for homes similar to the one in question, start there. So spending $170,000 would be a good deal ($170,000 plus 20,000 equals $190,000). Too many times I see people lose good deals because in their mind the want the repair costs to come off the LIST price and get out bid by more knowledgeable investors. I remember a saying I learned in Texas, “Pigs get fed, hogs get slaughtered.”
A few other points on foreclosures; a lot of banks will not take a contract contingent on the sale of another home. Be patient, it may take the bank days, even weeks to respond to your offer. Remember you may be dealing with layers of corporate America. Get a home inspection done, but don’t expect much in the way of repairs or credit in lieu of repairs. Finally, if you are borrowing money to buy a foreclosure, be prepared to show a true pre-approval, or even be pre-approved by the bank selling the foreclosure.
Get a Buyer’s agent to assist you. You will not get a better deal without one. In fact, many HUD foreclosures require you to have an agent qualified by HUD submit your bid. Look for a Realtor who knows the area and has experience with HUD and other bank owned homes. If their office takes a lot of bank listings, even better. Full time realtors typically know about upcoming office listings before they go on the market. That should give you an advantage over the others scouring for deals without a full time agent.

To sum it all up, bank owned real estate can be lucrative, but get good advice and listen to it. Be reasonable in your expectations and you will be rewarded.

Next up: Relo Homes