One’s misfortune is another’s opportunity. Even during the best market conditions, banks are foreclosing on their loans and trying to liquidate the asset.
Investing in a foreclosure is a potentially complicated process. We educate our investors and them through the steps needed in order to give the best return on investment. From understanding the process as a whole, to searching for and financing such a purchase, we are here to expertly guide you every step of the way.
In order to understand the foreclosure market, we first help our clients understand the foreclosure process. Once the bank forecloses on the mortgage, the home becomes an asset, or REO (real estate owned), that needs to be liquidated. The bank will typically get several broker price opinions, which take into consideration any defects, necessary repairs and cosmetic issues. The bank then bases the listing price on those broker price opinions. Most banks do not sell directly to investors or home buyers unless it is a bulk purchase with multiple properties. Once the home is priced and prepared for sale, it is listed for sale. If you are interested in this type of investment, we can help to navigate the process of pursuing a foreclosed home.
Buyers looking for these homes might be interested in finding a rental property, a home to flip, or a family home at a bargain price. In those instances, we are able to generate a search featuring only REOs (real estate owned properties), HUD homes or bank owned properties. That list of homes is custom tailored to every buyer, taking into account the many factors that influence this unique investment. Depending on the needs of the buyer, we can generate an individualized search through a variety of different types of listings.
Cash is the best option in financing a foreclosure, and only a strong conventional mortgage lender will agree to lend money for a bank owned home. FHA mortgage will often not approve a bank owned home, as these homes usually have multiple issues that need to be addressed before sale. A good option for financing such an investment would be a Rehab loan, and there are several programs to choose from. We will put you in touch with several lenders once you determine a bank owned home is right for you.
Foreclosed homes offer the opportunity to find some great real estate properties at a discount, but they can also bring with them a variety of complications. For example, some neighborhoods call for a Point of Sale inspection, often requiring thousands of dollars in escrow requirements for the buyer. Other neighborhoods have very few bank owned homes and once one comes on the market, it is sold in a matter of 48-72 hours in a multiple offer situation. Drawing on our years of experience, we are able to help you navigate the nuances of this type of sale and maximize your time and money.
Despite the challenges associated with buying a bank owned house, one can often be a great investment. Knowing the process, the pitfalls and the financing of this type of sale is imperative for success. With years of experience and a passion for customer service, we will help you breathe new life into a foreclosed house.
Frequently Asked Questions
Below you will find frequently asked questions and answers about our foreclosure services
Once the bank forecloses and repossess a house; three separate brokers are hired to provide an opinion on the selling price in current condition. Banks feel that their listing price reflects the condition of the house in question as well as accounts for necessary repairs. Sometimes those opinions are incorrect and the house sits on the market for a while. In those instances, it is possible to negotiate a lower price but banks are systematic in the price reductions and most often only come down a set amount… We work hard to recognize opportunities and to find additional reasons to ask for a further price reduction, but we want to set the expectation that in majority of the cases, the listing price is within 3% -10% of the selling price.
Many of our clients tried to purchase a home directly from the bank but in all instances, these attempts were unsuccessful. Banks list homes on the open market for all public to have a fair chance.
We can help with any home that is listed for sale by any brokerage through the MLS, as well as any ‘for sale by owner’ homes. We unfortunately cannot help with any other opportunities that are ‘off-market’. Websites like auction.com, xome, hubzu, and sheriff sales offer opportunities, in some cases still occupied by residents. In most cases these homes cannot be viewed, so essentially the buyer is buying site un-seen. We do not work with these properties. These are for exprienced investors and require extreme due diligence. A house through Sheriff’s sale can be purchased at an immense discount but with attached mechanics, property tax liens or unpaid water bills… If you choose to purchases these properties, do thorough research.
Conditions vary significantly. In some rare instances, the house will be in a practically move-in condition. These homes are often sold in the first 24-48 hours in a multiple offer situation. Majority of the time, the condition ranges from needing minor cosmetical repairs and updates, to severe structural problems to severe mold and moisture issues.
Cash is best for a foreclosed home. Because these homes are often in pretty bad shape, little to no financing is available. Most investors use cash or an equity loan to purchase investment properties. For an owner-occupied home buyer, a 203k rehabilitation loan is available. In this instance a buyer can work with a licensed, insured and bonded contractor to purchase a home that needs significant amount of work. This process is very involved and full of nuances, with one being that the contractor must do all of the work – homeowner cannot do any repairs required by the lending bank. Although a tedious and very detailed process, we successfully close many rehabilitation loans that offer a great opportunity to a buyer looking to purchase a bank owned home.