Having heard about the increasing forclosure rates around the country and having an interest of getting back in the real estate market myself, I’ve been looking around for some good deals. However, I have yet to see any of the ‘steals’ that people talk about. Are there really $300k homes being sold for $200k? Is there a set of secret websites one has to go to in order to find these great deals? Or is it just a case of media inflation of being able to get a $300k house for $290k.
You won’t find a $300K house listed for $200K. You’re going to have to find a foreclosed house about to go up for auction and convince the seller that it won’t bring even that at an open auction.
Of course, you’d better have a certified check with you because for a deal like that, the seller isn’t going to want to wait for you to arrange financing.
(Incidentally, this is exactly the same advice you’ll get in one of those “how to get rich in real estate” books that come along every few years – and just about the same amount of detail.)
For the record, a friend of mine actually did find a house like this, and did drive a hard bargain, and did get it for substantially less than market value. He also spent enough in structural repairs over the next few years to wipe out his original savings.
There are “good deals” to be had, but it really depends on your idea of a good deal.
Fixer-upper opportunities are abundant, whether from break ins that have occurred after the home has been vacated, home-owners trashing the place before they are forced out, or just really, really bad DIY home “renovations”.
We have been looking at homes here in Las Vegas that are either in foreclosure or short-sale (pre-foreclosure). Some of the houses have had upwards of 500K owed on them and they are listed for 300K… but (there is always a but) some of the houses needed variable amounts of work. I’m talking everything from “This place needs a lot of drywall repair/new paint/flooring” all the way to “The only thing that would help this place is a flame thrower/wrecking ball & a bulldozer”
We looked at about 40 properties so far, and we are on our third submitted offer. The current place is almost “perfect”, the only thing is that the tile counter tops need to be replaced- they’re kind of icky (grout is dirty & cracked a bit). The bank is owed appx 450K and our offer is the asking price of 310K. No pool/ no hot tub/ no backyard landscaping.
The banks have lots of flaming hoops they want you to jump through: large earnest money deposits (we have 5K in earnest $$ in), pre-approved for a mortgage, long waits waiting for the bank, low-no commissions for the Realtors, some want you to use their bank for financing or demand you to use a certain lender etc… etc…
Do your research for you local market (county assessor, newspapers etc), talk to a Realtor that you can trust (like a friend or relative who you know won’t push you around), and be patient.
And when you do buy get a HOME INSPECTION!!! It will save your ass if there is something really wrong with the place.
That isn’t quite correct.
I just bought a foreclosed house in January. The house was bought brand new in December 2006. I closed the first week in January 2008. I bought it from Fannie Mae*. I did not get it at auction.
I got it for over 100,000 under the original price which was over 300. It was on the market for a bit more but I made an offer and they took it. The listing price was 100 k under the original price. So I got it for 2/3rds of the original price and the house was only a year old. I did, however, have to do some minor work (under 2,000 easy**) to the place but it is a very nice house.
I signed up for a website called Ziprealty. They let you check houses out online. I got a great deal, the agent was fine and in general I am extremely happy about the deal I got.
Fannie Mae (and possibly Freddy Mac) have all kinds of foreclosures right now and they are basically doing fire sales on the houses. Fannie Mae isn’t in the business of selling houses so when they end up with foreclosures they sell them as fast as possible. They will make deals.
Slee
*I think it was Fannie Mae.
*New water heater, new garbage disposal, garage door openers. I will get a new fridge but the present one works, I’d just like a nicer one. I also need to landscape but that is a good thing, I don’t have to undo the previous owners work.
***I love my new house!
While I can’t link to the story heard on NPR last week, the gist was that foreclosure properties can be fraught with pitfalls. Be ready to make necessary repairs and evict people before seeing a return on your investment.
That word. I do not think it means what you think it means.
I know, I know. Market value is the price the house would get on the market, i.e., the price he paid for it. Will you accept “substantially less than the market value of similar properties”?
www.reotrans.com is a website that lists foreclosed properties now being sold by the lenders who acquired them from the defaulting borrower.
You may have to sign up to use it, but I think you’ll find (as I have) that there are really good prices listed.
As has already been said, though, there are inherent risks in such deals. The properties are generally sold “as is”, and may be in huge disrepair. YMMV.