Whether you’re in the market for your first new home or your tenth, you’ll discover that there are a lot of new options available to prospective home buyers. You’ll find traditional buying options, online home auctions, and other choices a Realtor can explain to you. One buying option you may not have thought of, though, is that of bank owned properties.
When buying real estate owned properties, take note of the condition of the property you are buying. Many real estate owned properties that are priced low may need substantial repairs. In most cases, these repairs can easily be completed without lowering your profit margin. However, there will be some properties you should not consider because the associated repairs would be too costly. Be somewhat cautious but realize these properties that require some work often reap the greatest reward.
Current and potential investors can find bank owned homes from several sources. Banks often have search engines on their web sites that allow people to look for properties in different locations. Searchers can use price, amenities, and other factors to narrow down the selections so that they can find properties that look like good investments.
Other ways to find bank foreclosures include going to third party listings. There is a proliferation of independent and third party Web sites who will also provide information about properties. With all Web sites, however, be careful. Many of these sites are trustworthy, but not all are. Use your best judgment when dealing with third party listings.
Often when you make an offer on a bank owned property the bank will counter offer. Expect a period of price-haggling and negotiation to get to a final acceptable price. During the negotiation process, be sure to mention any repairs that are needed. Upon purchase you will receive a policy that covers title insurance. Do not fall into the trap of becoming so enamored of a particular property that you pay full price or above. Negotiate and talk things over and you will be good to go.
Every successful real estate investor has good sources of property deals as a key part of his arsenal. One option that you may consider is that of bank foreclosures and REO properties. Properties are often sold cheaply at this stage because they did not sell during the foreclosure process and once they are owned by the bank they are simply an expense that needs to be removed from their accounts.
Advantages And The Disadvantages Of REO Properties
There are advantages and disadvantages when it comes to buying REO properties. One advantage of buying a REO property is most REO properties are below market value. The reason for this is REO properties are properties that are owned by the bank. Since the bank is liable for the taxes on the property they will be more than happy to sell it to you at below market value. Another advantage of buying REO properties is there is less competition. Not all real estate investors know about REO properties.
One last advantage of REO properties is that REO properties are easy to find. Most banks have a number of them and will love to sell them. One disadvantage of buying REO properties is when you buy REO properties, you buy them as is. Usually you will have to call the electric the gas and the water companies to get them turn on.
A next disadvantage of buying REO properties is you will have to pay for all the repairs yourself if the property needs any. It is important to know what in the property need to be fixed before you buy the property.
One last disadvantage of buying REO properties is that you will not know about the past of the property. One way to overcome this is to do some research on the property. A good place to look is the public records. When it comes to buying REO properties it has its advantages and it disadvantages. With the information you read here you will have some idea what they are.
HUD Homes - Your Guide To HUD Home Listings
In today’s real estate market it doesn’t matter if you dream of buying a home for yourself or you're an investor looking to make money. The fact is - the market for buying HUD homes is as high as it has ever been. With more than a million HUD homes expected to hit the market this year you will certainly want to be able to find them
Five Common Mistakes Made Buying HUD Homes
You may have gone by a house and saw the orange stickers on the front door or windows. You looked at the sign stating this was a HUD homes for sale. It also said to contact a local real estate agent. You looked around the property and thought this is what you have been looking for as a home for yourself or as an investment. The problem is you have not bought a HUD home for sale or you really don’t know what they are.
To begin with HUD homes for sale are HUD foreclosed homes. They are homes that have been financed by an FHA loan and the loan has gone into foreclosure. The HUD foreclosed home has been assigned to a Marketing and Management Contractor to service and market the property.
There are a lot of interest in HUD homes for sale by both home buyers and investors. They also are lot of mistakes made in buying HUD foreclosed homes. I am going to list 5 common mistakes made buying HUD homes for sale.
1. Finding a Real Estate Agent.
I am listing this mistake in buying a HUD foreclosed home first because I think it is the most common and the most costly mistake. You probably think all you have to do is called any real estate agent or one that you have used in the past. It is my opinion that 95% of real estate agents have not sold a HUD home for sale or worst yet; most real estate agents don’t even know what one is. Buying a HUD home for sale is not anything like buying a home from a home owner. You need to search for a real estate agent that is experienced in HUD homes for sale.
2. Paying too much for the HUD Foreclosed Home.
The HUD home for sale is listed at what HUD calls “Fair Market Value.” It has been appraised by a FHA appraiser. My experience has been that the list price of a HUD foreclosed home is within 20% of market value either too low or too high. Again that is another reason you need an experienced real estate agent in HUD foreclosed homes. The agent should do a Competitive Market Analysis of the property. An experienced agent also will be able to determine the lowest bid that HUD will take for the property.
You should have an independent inspection done on the property. Most HUD homes sale will have what HUD calls a “Property Condition Report.” The Property Condition report is similar to an inspection and it gives you a pretty good idea of the HUD foreclosed home. You still need to have an independent inspection done.
4. Sold “As-Is” Condition
. All HUD homes for sale are sold in “AS-IS” condition and HUD means AS-IS. They will not do any repairs! So when you make a bid on a HUD home for sale, you should adjust your bid amount to reflect needed repairs.
5. Closing Costs.
HUD will pay up to 5% of the purchase price for certain Buyers’ closing costs. The 5% must be included in the initial bid and the key word is “certain” closing costs, not all. Again, I know I am repeating myself, but an experienced real estate agent in HUD foreclosed homes would know which closing costs HUD will pay. For example, your winning bid on a HUD home for sale was $100,000 and you asked HUD to pay 5%($5,000) of your closing costs. HUD will only pay certain closing costs and those closing costs only came to $2,000. You would LOSE $3,000($5,000-$2,000).
Buying HUD Homes for sale can be very profitable if you can eliminate the costly mistakes. Common mistakes that can be avoided by doing some research and finding an experienced real estate agent in selling HUD foreclosed homes.
HUD Homes For A Dollar?
1) You can buy a home from the government for $1.
Did you really think you could? Sadly, most people that enter their credit card numbers on those flashy investment websites, or call in and order that expensive As Seen on TV package actually think they can. HUD does have programs which allow charities, city, and county governments to buy properties at $1, but there are no programs for investors or home buyers which allow this.
2) HUD homes are in the worst neighborhoods in the city.
Not true at all. HUD homes can in fact, be found in even the most exclusive areas of the city.
3) HUD homes are usually falling down, or have been condemned by the city.
Again, not true. While there are certainly some houses in very poor shape, the vast majority of houses are in remarkably good shape.
This is a huge myth. HUD gets their homes when a home owner defaults on an FHA insured mortgage. People from all walks of life lose houses everyday. The number of HUD owned homes in middle class neighborhoods would astound you. The next time you see a website offering information on $1 Government homes, you’ll know better than to click on that blinking box! If however you are interested in a fixer-upper, HUD may have a house for you.