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I'm new to the real estate market. My husband and I would love to find a home of our own within the year and stop renting. We live in NYC. I have started to do a lot of research.
Several people have told me to look at the foreclosure market, something I know nothing about.
Any suggestions for sources to learn more about the market? The process, risks, and opportunities?
Functionally it's the same as purchasing a home. Often you can submit a pre auction offer if you really like a place. A couple key differences- more than likely the seller (bank) won't allow for any contingencies and you'll get to meet the other potential buyers at the auction. You may get it for less or not, depends on how many show up and how desirable the property is. More often than not, the buyers are buying with cash.
Functionally it's the same as purchasing a home. Often you can submit a pre auction offer if you really like a place. A couple key differences- more than likely the seller (bank) won't allow for any contingencies and you'll get to meet the other potential buyers at the auction. You may get it for less or not, depends on how many show up and how desirable the property is. More often than not, the buyers are buying with cash.
Is the mortgage approval process different when the borrower is buying a foreclosed home?
Is the mortgage approval process different when the borrower is buying a foreclosed home?
If you're buying a bank owned property, no.
If you're on the courthouse steps trying to nab a property in foreclosure, there's no mortgage process because you need to pay for the house in full with cash.
Are you asking about auctions (as your thread title states) or bank owned property in general?
If you're on the courthouse steps trying to nab a property in foreclosure, there's no mortgage process because you need to pay for the house in full with cash.
Are you asking about auctions (as your thread title states) or bank owned property in general?
Thanks, that's helpful.
I'm asking about both, I guess. I'm new to the terminology, but when I initially came across foreclosure properties on Trulia, they were referring to the auction. How do you find bank-owned homes?
What you'll see on Trulia, Zillow, and Redfin are standard sales, short sales, and REOs. REOs are the bank owned homes (real estate owned). It means they already went through the foreclosure process and that the bank now owns the house. This is probably what your friend was suggesting you look into, if you need to obtain a mortgage to buy a house. On Redfin, to view only REOs, go into the search options and click off MLS listed homes and For sale by owner homes, leaving the MLS listed foreclosures box ticked. This will show you all the bank owned homes in the area (if Redfin services your area). There's probably a similar option on Zillow or Trulia.
Banks may be a little flexible on price and -may- cover some closing costs, but usually the terms they offer you are their terms. They have too many properties to negotiate back and forth much with buyers. If you make a realistic offer with decent terms, you could get a good deal on a property. Bank owned properties can range from move in ready to completely trashed, so always see the home and base your offer off the condition of the property and local comparables (recently sold houses of a similar condition, location and size).
If you can pay in full in cash for the house, you could try the foreclosure auction but you would probably want to bring someone else that is experienced with you. You might also want the help of a site like Foreclosureradar to look up upcoming sales and drive by the properties before bidding, or else you'll have no idea what you're bidding on or what condition it's in. Usually investors who bid on properties at auctions are not bidding blindly; they either have researched a property and know what their maximum to pay for that specific property is, or they have friends or assistants on the phone looking up the property online and/or standing outside of the property letting them know the condition or market value of the property when fixed up, so they can appropriately guess what they need to buy the property at to make a profit.
You can finance a home at an auction unless they specify cash only. Just have your pre app letter and all that in line.
I seriously doubt that people would recommend going to real estate auctions as a first time homebuyer to a friend. Seems like you're setting up your friend for a great risk.
Probably best to stick with standard sales or REOs. The market is still weak/flat and any seller who needs to sell during the winter is probably reasonably willing to negotiate a little.
I seriously doubt that people would recommend going to real estate auctions as a first time homebuyer to a friend. Seems like you're setting up your friend for a great risk.
Probably best to stick with standard sales or REOs. The market is still weak/flat and any seller who needs to sell during the winter is probably reasonably willing to negotiate a little.
No one suggested the auction. My friend suggested I look at foreclosed homes. It was happenstance that when I first started looking, I came across auctions for homes. That's why I came here to try to understand how it works. I see now that I would be more interested in the REO process since we are looking at homes around $800k and would have a mortgage.
THANK YOU all very much. This is all so helpful. It will be fun to do more researching.
You can finance a home at an auction unless they specify cash only. Just have your pre app letter and all that in line.
We are preapproved. I think REO sounds better for us - auction does sound risky. Thank you!
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