Home Buying Info
Understanding a little bit about the home buying process can help you make a more sound decision. This home buying resource center should help. Be sure to fill out a Buyers Request Form to get started.
 

BUYING DISTRESSED PROPERTY
Many of the homes for sale today - as many as half
in some markets - fall under the category of "distressed
properties."

These are homes that have either gone through foreclosure or
are being marketed as "short sales." In a short sale, the homeowner can't afford
to maintain the mortgage, but the lender - rather than foreclosing - agrees to
the sale of the property for less than the balance of the loan.

These
types of sales have different dynamics than traditional sales - with more
paperwork, often a longer transaction process and, in some cases, more
frustration. For these reasons, many buyers shy away from foreclosures or short
sales.

However, if you understand the potential pitfalls of purchasing a
distressed property - and work with an agent who has a thorough knowledge of
this market - you can get a great home at a great price.

Thousands of
RE/MAX agents have been specially trained in working with foreclosures or short
sales through the Certified Distressed Property Expert class or a similar
course. They can guide you through the process and help you locate and purchase
just the right home for you.

I am a Re/Max Distressed Property Expert, with my CDPE designation.
(Certified Distressed Property Expert)

This is an outstanding time to buy a
home - distressed property or not. With historically low interest rates, and a
glut of homes on the market in many areas, there are bargains to be
found.

Is a distressed property for you? Here are pros and cons of buying
one.
Advantages of Buying a Distressed Property
 
First, you'll be dealing with a highly motivated seller – either a bank in
the case of a foreclosure, or in a short sale, sellers who are in financial
trouble and very interested in getting out of a mortgage they can no longer
afford.

These types of sales take much of the emotion out of the
process. You won't be insulting anybody, for instance, if you make an offer
that's lower than the asking price. (That's not to say that the low offer will
necessarily be accepted, of course.)

Lenders are extremely interested in
getting these homes sold and off the liability side of their balance sheets.
Many foreclosed properties can be purchased for only a percentage of what they
would have commanded five years ago. (This situation is beginning to change,
though; bidding wars are breaking out on some foreclosed properties these days,
especially those that are moderately priced. Your RE/MAX agent will know what's
going on in this area and will be able to help you arrive at a reasonable
strategy for making an offer.)

If you're looking at a short sale, you're
not likely to get quite as good a deal as on a foreclosure. But there are
definite advantages to purchasing one of these homes. For one thing, since the
homeowners want to get the home sold quickly, they are likely to keep it
well-maintained and in good move-in condition.
Disadvantages of Purchasing a Distressed Property

If you're looking for a "steal," you're probably not going to find it. The
market is heating up, with more and more buyers jumping into the market. If
you're purchasing a home to live in, you'll often be competing not only against
buyers similar to yourself, but against investors. More competition inevitably
leads to higher prices.

The transaction process for short sales or
foreclosures often takes longer than for traditional transactions. It's
sometimes not clear which lending institution actually owns a mortgage loan, and
it can take time to get it all sorted out – especially if there's a second
mortgage involved, which is often the case.

Some foreclosed properties
are also in rough condition. Many have sat idle for a long time with minimal or
no maintenance. The departing owners may have sold off fixtures, or damaged the
property.

Interested in searching for foreclosures in your area? Access
the Foreclosed Properties database here on remax.com.

Purchasing Tips

It's critical to have the home professionally
inspected before you make an offer or put down earnest money. The inspector will
assess the structure's soundness and may uncover problems that would be very
costly to repair. Banks usually sell foreclosed homes as-is, meaning they won't
make any allowances for repair. And even in a short sale, they likely won't make
any such allowances, because they're already losing money on the
transaction.

You should have your financing in order before pursuing a
foreclosure purchase. Pre-approved buyers have the best chance of getting the
property in case of multiple offers. Also, banks generally aren't interested in
contingencies (for instance, needing to sell your current home before purchasing
another).

You might also consider hiring an appraiser who'll tell you
what the house is worth. A RE/MAX agent can also perform a Comparative Market
Analysis.

To guide you through the process - from obtaining a loan to
identifying a home, to negotiating with the sellers (whether homeowners or
banks), to closing - contact a RE/MAX agent.


Mortgage and foreclosure terms defined.

Distressed Properties and FHA Loans

If you're a first-time homebuyer, a federally
insured FHA (Federal Housing Administration) loan might be a good option. The
FHA has a program to help you repair a fixer-upper. You can get one loan that
combines the mortgage with the repair costs. The amount of the loan is based on
the projected value of the property once repairs are made.

FHA loans
only require a 3.5 percent down payment – compared to 20 percent with
conventional loans – and the down payment can come from an employer, family
member or charitable organization. FHA loans also have lower closing costs than
conventional mortgages.

Since the federal government insures these loans,
you'll get a competitive interest rate and lenders may be willing to give you
terms that make it easier to qualify for a loan. If you have less-than-perfect
credit, it's easier to obtain an FHA loan than a conventional mortgage.


Find out more about FHA loans.

About HUD Homes

FHA-insured homes that go into foreclosure are
acquired by the U.S. Department of Housing and Urban Development (HUD). HUD
homes are offered for sale through Internet sites managed by management
companies under contract to HUD.

Real estate agents who register with HUD
can submit offers on behalf of their clients. HUD pays the agent's
commission.

HUD homes are sold as-is, without any warranty. HUD doesn't
make repairs nor pay to correct any problems. Again, that makes it critical to
have homes inspected before making an offer.

In designated revitalization
areas, law enforcement officers, K-12 teachers, firefighters and emergency
medical technicians can purchase a home at 50 percent off the listing price.
(They must commit to live in the property for three years.) Additionally,
evacuees from hurricanes Katrina, Rita or Wilma can purchase a HUD home at a
discount.

 

Please review the following links:

Please be sure to fill-out our Buyer's Request form

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