Wednesday, June 15, 2011
Thursday, May 26, 2011
9 Reasons To Buy A House Now
Marc Davis, provided by
Investopedia
Wednesday, May 25, 2011
If you're planning to buy a house right now, the next few months may be the best time to buy. Waiting for both housing prices and interest rates to fall may not be a good strategy for potential homebuyers since analysts don't expect any significant declines in these two most important home-buying factors. Here's nine real estate trends that suggest you should get into the housing market sooner than later. (To learn more, check out 5 Tips For Recession House Hunters)
TUTORIAL: Buying a Home
1. Lowest Housing Prices in Years
Nobody knows when the housing market will hit bottom, but prices are at their lowest in several years and may soon start inching back up again. So buying now or in the near future may be the right time. An abundance of bargain-priced housing is now available because of foreclosures and falling prices.
2. Interest Rates at a 50-Year Low
Interest rates are near a 50-year low, according to housing analysts. By the second week of May, 2011, 30-year fixed mortgage rates had fallen to their lowest rates of the year at 4.63%. Although mortgage rates vary from day to day, the 30-year rate at this level is an attractive inducement to first-time buyers, or buyers who want to either move up to larger residences, or others, including many empty-nesters wanting to sell and move to smaller houses or condos.
3. Interest Rates Expected to Go Up
As the economic recovery gains momentum, interest rates are expected to increase, making mortgages more expensive. Even a half-percent increase in mortgage interest can add a hundred dollars or more to your monthly payments, depending on the amount of your loan. (To learn more about interest rates, read Forces Behind Interest Rates.)
4. Adjustable Rate Mortgages at Record Lows
Adjustable Rate Mortgages (ARMs) are also lower now, although there are risks that interest rates may increase over the life of the mortgage and the balloon payment due at the end of the mortgage life, usually three or five years, could be substantial. Nevertheless, for new buyers who are sure they'll have enough income to meet payment obligations, an ARM may be the best way to buy a house. Keep in mind that payments may increase on a monthly basis. For a full explanation of advantages and risks in an ARM, visit the federalreserve.gov.
5. Low Down Payment Mortgages Available
Low-down-payment financing through Federal Housing Administration-insured mortgages is available as an additional inducement to buy a house now. Down payment minimum requirements also fluctuate and may increase as the market heats up, so potential buyers with less cash to consummate a deal may be well-advised to buy now.
6. Easy to Qualify, Easy to Borrow
Lending standards have become less rigid recently, so qualifying for a mortgage may be easier. Experts advise that a potential buyer become pre-approved for a loan by a lending institution - meaning that a lender guarantees to make the loan contingent on an appraisal of the property. But the good news in seeking pre-approval is that lenders are now willing to let a potential buyer take on more debt than the previous formula allowed - a percentage of monthly income. (For more on getting a cost effective mortgage, see Score A Cheap Mortgage.)
7. Lenders Offer No-Fee Mortgages
Many banks and other lending institutions are waiving mortgage loan generation and other fees and points (each point represents 1% of the loan amount), thereby reducing the cost of buying.
8. Home Builders Eager to Sell, Offer Incentives
Home builders, competing with the resale market, are offering incentives to potential buyers to reduce their inventory of unsold new homes. Incentives may include cash for furniture or free refrigerators, washers and dryers. In Seattle, for example, builders have offered opportunities to win iPads or Smart phones, and $3,000 buyer bonuses. Specific demographic groups, including military personnel, police, firefighters and health-care workers, have been targeted by builders for special offers. But virtually anyone who can qualify for a mortgage is likely to get a good deal from a homebuilder who is eager to sell.
9. Motivated Home Owners Desperate to Sell
Desperate sellers of existing homes have also been offering attractive inducements to potential home buyers, including warranties on appliances, air conditioners and furnaces. Some sellers are even offering cash or have included furnishings, refrigerators, washers and dryers as a bonus to potential buyers. With so many existing homes in foreclosure or underwater - bargain prices are abound in this depressed market. (For help on buying a house, read Top Tips For First-Time Home Buyers.)
The Bottom Line
With a convergence of the factors above, all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It's a buyer's market, but like everything else in life, the bargain deals won't last. (To help determine if it is the right time to buy, read Are You Ready To Buy A House?)
Original story - 9 Reasons To Buy A House Now
Copyright (c) 2011 Investopedia US. All rights reserved. Investopedia.com is a division of ValueClick, Inc.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/05/25/investopedia52532.DTL#ixzz1NWAvDpy8
Investopedia
Wednesday, May 25, 2011
If you're planning to buy a house right now, the next few months may be the best time to buy. Waiting for both housing prices and interest rates to fall may not be a good strategy for potential homebuyers since analysts don't expect any significant declines in these two most important home-buying factors. Here's nine real estate trends that suggest you should get into the housing market sooner than later. (To learn more, check out 5 Tips For Recession House Hunters)
TUTORIAL: Buying a Home
1. Lowest Housing Prices in Years
Nobody knows when the housing market will hit bottom, but prices are at their lowest in several years and may soon start inching back up again. So buying now or in the near future may be the right time. An abundance of bargain-priced housing is now available because of foreclosures and falling prices.
2. Interest Rates at a 50-Year Low
Interest rates are near a 50-year low, according to housing analysts. By the second week of May, 2011, 30-year fixed mortgage rates had fallen to their lowest rates of the year at 4.63%. Although mortgage rates vary from day to day, the 30-year rate at this level is an attractive inducement to first-time buyers, or buyers who want to either move up to larger residences, or others, including many empty-nesters wanting to sell and move to smaller houses or condos.
3. Interest Rates Expected to Go Up
As the economic recovery gains momentum, interest rates are expected to increase, making mortgages more expensive. Even a half-percent increase in mortgage interest can add a hundred dollars or more to your monthly payments, depending on the amount of your loan. (To learn more about interest rates, read Forces Behind Interest Rates.)
4. Adjustable Rate Mortgages at Record Lows
Adjustable Rate Mortgages (ARMs) are also lower now, although there are risks that interest rates may increase over the life of the mortgage and the balloon payment due at the end of the mortgage life, usually three or five years, could be substantial. Nevertheless, for new buyers who are sure they'll have enough income to meet payment obligations, an ARM may be the best way to buy a house. Keep in mind that payments may increase on a monthly basis. For a full explanation of advantages and risks in an ARM, visit the federalreserve.gov.
5. Low Down Payment Mortgages Available
Low-down-payment financing through Federal Housing Administration-insured mortgages is available as an additional inducement to buy a house now. Down payment minimum requirements also fluctuate and may increase as the market heats up, so potential buyers with less cash to consummate a deal may be well-advised to buy now.
6. Easy to Qualify, Easy to Borrow
Lending standards have become less rigid recently, so qualifying for a mortgage may be easier. Experts advise that a potential buyer become pre-approved for a loan by a lending institution - meaning that a lender guarantees to make the loan contingent on an appraisal of the property. But the good news in seeking pre-approval is that lenders are now willing to let a potential buyer take on more debt than the previous formula allowed - a percentage of monthly income. (For more on getting a cost effective mortgage, see Score A Cheap Mortgage.)
7. Lenders Offer No-Fee Mortgages
Many banks and other lending institutions are waiving mortgage loan generation and other fees and points (each point represents 1% of the loan amount), thereby reducing the cost of buying.
8. Home Builders Eager to Sell, Offer Incentives
Home builders, competing with the resale market, are offering incentives to potential buyers to reduce their inventory of unsold new homes. Incentives may include cash for furniture or free refrigerators, washers and dryers. In Seattle, for example, builders have offered opportunities to win iPads or Smart phones, and $3,000 buyer bonuses. Specific demographic groups, including military personnel, police, firefighters and health-care workers, have been targeted by builders for special offers. But virtually anyone who can qualify for a mortgage is likely to get a good deal from a homebuilder who is eager to sell.
9. Motivated Home Owners Desperate to Sell
Desperate sellers of existing homes have also been offering attractive inducements to potential home buyers, including warranties on appliances, air conditioners and furnaces. Some sellers are even offering cash or have included furnishings, refrigerators, washers and dryers as a bonus to potential buyers. With so many existing homes in foreclosure or underwater - bargain prices are abound in this depressed market. (For help on buying a house, read Top Tips For First-Time Home Buyers.)
The Bottom Line
With a convergence of the factors above, all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It's a buyer's market, but like everything else in life, the bargain deals won't last. (To help determine if it is the right time to buy, read Are You Ready To Buy A House?)
Original story - 9 Reasons To Buy A House Now
Copyright (c) 2011 Investopedia US. All rights reserved. Investopedia.com is a division of ValueClick, Inc.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/05/25/investopedia52532.DTL#ixzz1NWAvDpy8
Monday, May 16, 2011
What is the home buying process all about?
What is the home buying process all about? Where do you start?
Your Agent: First you need a good, honest and very knowledgeable Realtor. Someone like me for instance, who has sold homes in the area you are looking in for a good long time, knows the market very well and can give you good feedback. An experienced agent, like me, can help interpret that “disclosure package” for you and have good recommendations for scheduling your Wood Destroying Pests and Organisms inspection and your contractor inspection. Explain what title insurance is and why you need it. A good agent, like me, will be able to explain the purchase contract in ways you will be able to understand and provide you with an accurate timeline for satisfying contingencies within the contract.
So, this is how it goes down:
Initial consultation with a Realtor to define relationships, determine wants and needs, discuss financial qualifications and lenders, and fill out a basic worksheet
Loan Qualification: this is a big step and one you should do before looking at homes. I will give you recommendations of Loan Officers I know who can provide you with good service and reliable information. There are a lot of charlatans out there who will lure you in with the promise of some super low rate but when it comes time to deliver, they rarely can. Staying close to your Realtor’s advice will keep you away from the pitfalls, and having a pre- approval letter from a direct lender like a bank also helps to make your offer stand out.
Home shopping: Tour properties that meet most of your qualifications. In the San Francisco market, because of the scarcity in some neighborhoods and varying housing styles it may be wise to remain somewhat flexible about some needs.
Making the offer: I will sit down with you and prepare the offer. I will discuss with you the contingencies and the disclosures that are due from the seller. If a disclosure package was supplied prior to writing the offer we will go over the disclosure package and sign off on them. Signing off on any inspections does not preclude you from having your own inspections. In fact, I highly recommend that you have your own inspections.
I then present the offer to the listing agent and in some cases directly to the seller. The offer has a 24 hour acceptance window for the seller to accept, counter your offer or reject it.
When your offer gets accepted we will open escrow at the title company. You will deposit your 3% initial deposit at the title company. The title company holds the money “in escrow” until closing.
Final Loan approval: You then will contact your loan officer and let him/her know that you have an accepted offer. The loan officer will order the appraisal and tell you what documents he still needs from you to complete your file.
I will get the loan officer a copy of the fully executed offer, and give him or her, the title company information and the name of the
escrow officer. The title company will send to the loan officer a copy of the Preliminary title report.
Inspections and other contingencies: I also schedule appointments for inspections according to your schedule. Most inspections are done during the week during regular business hours. It is highly recommended that you attend your own inspections. You will gain knowledge of your new home through another set of eyes.
Escrow Period: During the escrow period of usually 30 days you will be having inspections, reviewing the reports, removing contingencies, reviewing additional documents and you will also need to get homeowners insurance, accept of course, if it’s a condominium. The bank will require that you have it in place when you close.
The Closing: Once your loan is fully approved the bank will draw up all the documents to close on the loan. That is the Note and Deed of trust and other documents that support the loan. Once the loan documents are drawn the bank sends them to the title company. When the title company receives them the escrow officer will call me to help schedule an appointment for you to come in to sign. At this time she will also be able to prepare an estimated closing statement for your review. The closing statement will have an estimate of the final amount you need to bring to close on the property. The funds need to be in a cashier’s check or you can wire transfer them into the title company. If you elect to do a wire transfer I will get you the information to give to your bank or you will get it directly from the escrow officer. At the appointment you will need to bring identification, i.e. driver’s license or passport.
Recording and Getting Keys:: When you have signed everything the escrow officer will provide you with a copy of everything you signed. Once she has your funds and the banks funds she can reconcile the account and distribute the money to the seller and refund any money you may have paid in excess of what was finally required. When that is completed the escrow officer releases the deed to record. The deed is recorded and you now own the home and you receive the keys. CONGRATULATIONS!!!!!!!!!!!!
Your Agent: First you need a good, honest and very knowledgeable Realtor. Someone like me for instance, who has sold homes in the area you are looking in for a good long time, knows the market very well and can give you good feedback. An experienced agent, like me, can help interpret that “disclosure package” for you and have good recommendations for scheduling your Wood Destroying Pests and Organisms inspection and your contractor inspection. Explain what title insurance is and why you need it. A good agent, like me, will be able to explain the purchase contract in ways you will be able to understand and provide you with an accurate timeline for satisfying contingencies within the contract.
So, this is how it goes down:
Initial consultation with a Realtor to define relationships, determine wants and needs, discuss financial qualifications and lenders, and fill out a basic worksheet
Loan Qualification: this is a big step and one you should do before looking at homes. I will give you recommendations of Loan Officers I know who can provide you with good service and reliable information. There are a lot of charlatans out there who will lure you in with the promise of some super low rate but when it comes time to deliver, they rarely can. Staying close to your Realtor’s advice will keep you away from the pitfalls, and having a pre- approval letter from a direct lender like a bank also helps to make your offer stand out.
Home shopping: Tour properties that meet most of your qualifications. In the San Francisco market, because of the scarcity in some neighborhoods and varying housing styles it may be wise to remain somewhat flexible about some needs.
Making the offer: I will sit down with you and prepare the offer. I will discuss with you the contingencies and the disclosures that are due from the seller. If a disclosure package was supplied prior to writing the offer we will go over the disclosure package and sign off on them. Signing off on any inspections does not preclude you from having your own inspections. In fact, I highly recommend that you have your own inspections.
I then present the offer to the listing agent and in some cases directly to the seller. The offer has a 24 hour acceptance window for the seller to accept, counter your offer or reject it.
When your offer gets accepted we will open escrow at the title company. You will deposit your 3% initial deposit at the title company. The title company holds the money “in escrow” until closing.
Final Loan approval: You then will contact your loan officer and let him/her know that you have an accepted offer. The loan officer will order the appraisal and tell you what documents he still needs from you to complete your file.
I will get the loan officer a copy of the fully executed offer, and give him or her, the title company information and the name of the
escrow officer. The title company will send to the loan officer a copy of the Preliminary title report.
Inspections and other contingencies: I also schedule appointments for inspections according to your schedule. Most inspections are done during the week during regular business hours. It is highly recommended that you attend your own inspections. You will gain knowledge of your new home through another set of eyes.
Escrow Period: During the escrow period of usually 30 days you will be having inspections, reviewing the reports, removing contingencies, reviewing additional documents and you will also need to get homeowners insurance, accept of course, if it’s a condominium. The bank will require that you have it in place when you close.
The Closing: Once your loan is fully approved the bank will draw up all the documents to close on the loan. That is the Note and Deed of trust and other documents that support the loan. Once the loan documents are drawn the bank sends them to the title company. When the title company receives them the escrow officer will call me to help schedule an appointment for you to come in to sign. At this time she will also be able to prepare an estimated closing statement for your review. The closing statement will have an estimate of the final amount you need to bring to close on the property. The funds need to be in a cashier’s check or you can wire transfer them into the title company. If you elect to do a wire transfer I will get you the information to give to your bank or you will get it directly from the escrow officer. At the appointment you will need to bring identification, i.e. driver’s license or passport.
Recording and Getting Keys:: When you have signed everything the escrow officer will provide you with a copy of everything you signed. Once she has your funds and the banks funds she can reconcile the account and distribute the money to the seller and refund any money you may have paid in excess of what was finally required. When that is completed the escrow officer releases the deed to record. The deed is recorded and you now own the home and you receive the keys. CONGRATULATIONS!!!!!!!!!!!!
Wednesday, February 23, 2011
Unlocking the mysterious of home buying - APRIL 7th
Ever wish that all your questions about the home buying process could be answered at one time?
On Thursday, April 7th, 2011, 2500 Market St(enter on 17th), 6:30 – 8:00 will be “Unlocking the mysteries of home buying”. Informational and a question and answer seminar.
During the seminar you will learn: everything about the home buying process, When to buy, how to decide how long to hold a property, how to choose a realtor, what the mortgage process is all about, the importance of home inspections, escrow, closing and moving
Register by sending an email to: rubysmith@zephyrsf.com, type “Seminar” in the subject line
On Thursday, April 7th, 2011, 2500 Market St(enter on 17th), 6:30 – 8:00 will be “Unlocking the mysteries of home buying”. Informational and a question and answer seminar.
During the seminar you will learn: everything about the home buying process, When to buy, how to decide how long to hold a property, how to choose a realtor, what the mortgage process is all about, the importance of home inspections, escrow, closing and moving
Register by sending an email to: rubysmith@zephyrsf.com, type “Seminar” in the subject line
Friday, February 11, 2011
Ruby's Great Buys in San Francisco
Ruby’s Great buys in San Francisco
Inventory is picking up and the prices are phenomenal. Please contact me if you would like to know more about these great values
Here’s a list of what I think this week is a great buy in San Francisco:
• $759K 618 28th Av 3 bed/ 1 ½ bath in the Richmond Beautiful home
• $598 k 84 Coventry 3bed/ 2 bath needs a little updating(kitchen) but what a value for the location
• Noe and Eureka Valley are experiencing a lot of new inventory at amazing prices.
• $963k 821 Folsom #409, Huge 1453 sq. ft. 2 bed/ 2 en suite bath condo with huge patio and the best weather
• $275k 631 O’Farrell Large Studio at the Hamilton. Corner unit, 14th floor great views, and downtown location
• $399k 140 South Van Ness 1 bd/ 1 bath 6th floor w/ balcony4
• $549 615 Peralta, 2bed / 1bath, BIG views
Inventory is picking up and the prices are phenomenal. Please contact me if you would like to know more about these great values
Here’s a list of what I think this week is a great buy in San Francisco:
• $759K 618 28th Av 3 bed/ 1 ½ bath in the Richmond Beautiful home
• $598 k 84 Coventry 3bed/ 2 bath needs a little updating(kitchen) but what a value for the location
• Noe and Eureka Valley are experiencing a lot of new inventory at amazing prices.
• $963k 821 Folsom #409, Huge 1453 sq. ft. 2 bed/ 2 en suite bath condo with huge patio and the best weather
• $275k 631 O’Farrell Large Studio at the Hamilton. Corner unit, 14th floor great views, and downtown location
• $399k 140 South Van Ness 1 bd/ 1 bath 6th floor w/ balcony4
• $549 615 Peralta, 2bed / 1bath, BIG views
Friday, January 28, 2011
Martgage Rate inch up but are still the lowest in over 30 years
Following mortgage interest rates is as important as watching property values when trying to make the decision when to buy your new home
Please talk to me about this information or feel free to contact any of the loan brokers listed on this statement
Guarantee Mortgage / SOMA For more information: TEAMZ@GMWest.com
WEEKLY HOT RATES 1/26/2011
30 Yr Fixed Conforming to $417K 4.625%
"1.000" POINTS APR =4.625%
30 Yr Fixed Jumbo to $729,750. 4.875%
"1.000" POINTS APR =4.988%
30 Year Fixed Jumbo to 1 Million 5.375%
"1.000" POINTS APR =5.564%
5 Year Fixed Jumbo to $729,750 3.250%
"1.000" POINTS APR =3.244%
7 Year Fixed Jumbo to $729,750 4.000%
"1.000" POINTS APR =3.244%
30year Fixed FHA Conforming 4.500%
"1.000" POINTS APR =4.685%
INTEREST ONLY OPTIONS AVAILABLE
WE ARE FHA APPROVED - LOANS TO 95% AS WELL AS REVERSE MORTGAGES
SUPER JUMBO LOANS UP TO $5,000,000.
COMMERCIAL LOAN FINANCING AVAILABLE ACROSS THE COUNTRY
SPECIALIZING IN CONDOS, TIC'S, LOFTS FOR PURCHASE AND REFINANCE
Rate Index
1 Year Libor 0.780%
MTA Monthly T-Bill 0.318%
COFI-11th Dist 1.571%
6 Mo Libor 0.455%
Prime Rate 3.250%
* Rates and Programs Subject To Change without Notice
Your GM Team Partners
Dean Rizzi dean@drlending.com 415.694.5533
Sergei Andruha sergei@gmwest.com 415.309.0157
Natasha Lovas nlovas@gmwest.com 415.694.5544
C.J. Kerls cj@kerls.com 415.586.6003
Stephen Barber sbarber@gmwest.com 415.694.5550
Peter Elting pelting@emwest.com 415.694.5520
Phillip Cannon phillipcannon@mac.com 415.694.5509
Real Estate Broker, CA Dept. of Real Estate License #01370741
Please talk to me about this information or feel free to contact any of the loan brokers listed on this statement
Guarantee Mortgage / SOMA For more information: TEAMZ@GMWest.com
WEEKLY HOT RATES 1/26/2011
30 Yr Fixed Conforming to $417K 4.625%
"1.000" POINTS APR =4.625%
30 Yr Fixed Jumbo to $729,750. 4.875%
"1.000" POINTS APR =4.988%
30 Year Fixed Jumbo to 1 Million 5.375%
"1.000" POINTS APR =5.564%
5 Year Fixed Jumbo to $729,750 3.250%
"1.000" POINTS APR =3.244%
7 Year Fixed Jumbo to $729,750 4.000%
"1.000" POINTS APR =3.244%
30year Fixed FHA Conforming 4.500%
"1.000" POINTS APR =4.685%
INTEREST ONLY OPTIONS AVAILABLE
WE ARE FHA APPROVED - LOANS TO 95% AS WELL AS REVERSE MORTGAGES
SUPER JUMBO LOANS UP TO $5,000,000.
COMMERCIAL LOAN FINANCING AVAILABLE ACROSS THE COUNTRY
SPECIALIZING IN CONDOS, TIC'S, LOFTS FOR PURCHASE AND REFINANCE
Rate Index
1 Year Libor 0.780%
MTA Monthly T-Bill 0.318%
COFI-11th Dist 1.571%
6 Mo Libor 0.455%
Prime Rate 3.250%
* Rates and Programs Subject To Change without Notice
Your GM Team Partners
Dean Rizzi dean@drlending.com 415.694.5533
Sergei Andruha sergei@gmwest.com 415.309.0157
Natasha Lovas nlovas@gmwest.com 415.694.5544
C.J. Kerls cj@kerls.com 415.586.6003
Stephen Barber sbarber@gmwest.com 415.694.5550
Peter Elting pelting@emwest.com 415.694.5520
Phillip Cannon phillipcannon@mac.com 415.694.5509
Real Estate Broker, CA Dept. of Real Estate License #01370741
Tuesday, January 25, 2011
4 Tricks and Traps Foreclosure Buyers Need to Know
Interest in buying a foreclosed home is on the rise, but so are concerns about the risk involved in the process. In a December survey, Trulia found that 49 percent of Americans were at least somewhat likely to consider buying a foreclosure, up from 45 percent in May 2010. But the number of US adults who believed there are disadvantages to buying foreclosures had also increased, from 78 percent to 81 percent over the same time frame. Among those folks who had qualms about purchasing a foreclosure, the top concerns were:
• that buying a foreclosure might involve hidden costs,
• that the buying process itself is risky, and
• that the home might continue to lose value, after escrow closes.
While there certainly are risks that run with buying a foreclosed home, the most risky way to do it is also the least common method: at the foreclosure auction itself. Auction buyers often don't have the opportunity to fully vet the foreclosure to ensure that they are receiving clear title and/or to make sure they're not getting a lemon. With that said, most foreclosures are resold not at the foreclosure auction, but as an REO (short for Real Estate Owned - by the bank), listed by a real estate broker on the Multiple Listing Service and on Trulia!
When you buy an REO in this way, you have lots of opportunities to use some tricks of the trade, so to speak, to avoid some of the traps you may fear. Here are my Top 4 Tricks and Traps for Foreclosure Buyers:
1. As-is means as-is, period. (Most of the time.) Banks have very little interest, inclination or even the logistically necessary resources to execute repairs on your home. Many of these homes are managed by an asset management company in another state, and may not even have a local person besides the agent who can handle large repairs. Generally speaking, bank-owned homes are sold on a very strict "as-is, where-is" basis, which just means that you should expect to take possession of it, if you buy it, in exactly the position and location it is, no matter how defective. Do not walk into a viewing of a foreclosed home, notice how the plumbing is all ripped out of the wall, and make an offer for it, assuming you'll be able to get the bank to "fix" the issue later. Usually, if the bank is willing to do any repairs to a foreclosed home, they do so, on the advice of the listing agent, prior to the home being listed.
Out of hundreds of foreclosure transactions I have personally been involved in, I have seen exactly four where the bank did agree to do some level of repairs at a buyer's request. Every one of those times, the repair was to fix a health-and-safety endangering property defect, like a gas-leak or an electrical fritz. And every one of those times, the property defect was highly non-obvious - not something even a diligent buyer could have detected visually prior to making an offer. Maybe another few times I've seen a bank agree to a small price reduction due to surprising condition problems. And dozens of times, I've seen transactions fall apart or buyers take on the property’s repair costs, when they request repair credits, price reductions or actual repairs from the ban seller.
If a foreclosure you're considering has obvious property damage, have your contractor stop by with you or gather whatever information you need to get as comfortable as possible with your offer price, assuming that the bank will not be chipping anything in for repairs, before you make the offer.
2. The bank speaks no evil. When it comes to real estate disclosures, the fact is, the bank speaks not much of anything! Many states exempt banks and other types of corporate homeowners from making substantive disclosures about the condition of the property. Even in jurisdictions where the bank is not legally exempt, most banks will simply write across the required disclosures something to the effect that the bank has no knowledge of the property's condition. (Before you protest with a "that's not fair!!" keep in mind that the bank never lived in the property, so most often truly does have no idea of any important facts or details about its condition or location, the things an average home seller would be required to disclose.)
Even in a normal transaction, it behooves a buyer to be thorough in having the property inspected and meticulous about reviewing the resulting inspection reports. But buying a foreclosure ups even that ante, as you have no seller disclosures to highlight particular problems you should have looked at, and none of the usual legal recourse you would have if a “regular” seller made incomplete disclosures. Get a property inspection. A pest inspection. A roof inspection. A sewer line inspection. A pool inspection, if you have a pool and care about its condition.
Yes - all these inspections cost money, but the drama and thousands each of them can save you is well worth it. And read your state’s buyer inspection advisory or similar document (ask your agent), just to make sure you’re aware of all the inspections that are available to you, and work with your agent to determine which ones make sense, and which are not appropriate.
Some insider tips:
• Vacant foreclosures often have their utilities disconnected. Work with your agent to make sure the utilities get turned on - even for a single day - so that your property inspector can run the water taps, test the stove and dishwasher, see if the water heater and electrical outlets work, and so forth.
• If appliances are there, the bank will probably leave them there, even though they may not have technical “legal” ownership of them, so they may not be included in the contract, like in a "normal" home sale.
• However, the bank will not give you any sort of warranty on appliances, so try to obtain any warranty coverage you want or need elsewhere - from a home warranty company or, potentially, the original manufacturer/retailer.
3. The contract terms, they are a changin'. One thing squarely in the wheelhouses of local real estate pros are local market standard practices. From negotiating practices to which party pays which closing costs, every market is different, and experienced local agents are experts on this information. If you’re buying a foreclosure, though, the bank will often require you to use it’s own purchase contract, rather than the more commonly used state forms. Many times, this is done to advise the buyer of the bank’s refusal to make substantive disclosures (see above) and to change some of the normal practices for your area to the bank’s standard practices.
For instance, if you are buying a home in a contingency state, where you would usually have to sign a document proactively releasing contingencies, the bank’s contract will probably change that, so that your transaction operates on an objection period. In "objection" based transactions, you have a certain period of time in which you must either speak up about your concerns with the property and/or cancel the deal, or you will automatically be presumed to be moving forward with the deal and your deposit money will be forfeited if you change your mind after that date.
If you’ve been making offers on non-foreclosures on the standard contract form, or you’ve bought homes before and think you know the drill, please - I implore you - READ every word of the contract you sign when you buy a home from the bank, and ask your broker, agent or attorney to explain anything that doesn’t make sense.
4. Expect the unexpected. When you buy a foreclosure, you might end up working with the bank’s escrow company, instead of a company you or your agent selects. And the bank's escrow provider might be slow or disorganized. C’est la vie. The bank might rush you for your deposit money, but take their own sweet time coming up with the necessary signatures on their end to close the deal. Par for the course. You might expect that the bank would be desperate for buyers, and instead find out that there are 20 offers on the same REO. Or, you might be the only offer and still get your aggressively low (but still reasonable) offer rejected, only to have the bank reduce the list price of the home to the same price of your offer! (They often want to see if exposing it to other buyers at the new, lower list price might generate more interest and higher offers.)
When you’re buying a foreclosure, expect glitches, expect your calendar to be derailed, expect the bank to be inflexible and possibly even unreasonable. It’s not overkill to ask your broker or agent to brief you on the common complications they see in REO transactions. Having realistic expectations may keep you from pulling your hair out. And if the transaction turns out to run smooth as silk? You’ll be pleasantly surprised.
By Tara-Nicholle Nelson | Broker in San Francisco, CA Ask Tara @Trulia
• that buying a foreclosure might involve hidden costs,
• that the buying process itself is risky, and
• that the home might continue to lose value, after escrow closes.
While there certainly are risks that run with buying a foreclosed home, the most risky way to do it is also the least common method: at the foreclosure auction itself. Auction buyers often don't have the opportunity to fully vet the foreclosure to ensure that they are receiving clear title and/or to make sure they're not getting a lemon. With that said, most foreclosures are resold not at the foreclosure auction, but as an REO (short for Real Estate Owned - by the bank), listed by a real estate broker on the Multiple Listing Service and on Trulia!
When you buy an REO in this way, you have lots of opportunities to use some tricks of the trade, so to speak, to avoid some of the traps you may fear. Here are my Top 4 Tricks and Traps for Foreclosure Buyers:
1. As-is means as-is, period. (Most of the time.) Banks have very little interest, inclination or even the logistically necessary resources to execute repairs on your home. Many of these homes are managed by an asset management company in another state, and may not even have a local person besides the agent who can handle large repairs. Generally speaking, bank-owned homes are sold on a very strict "as-is, where-is" basis, which just means that you should expect to take possession of it, if you buy it, in exactly the position and location it is, no matter how defective. Do not walk into a viewing of a foreclosed home, notice how the plumbing is all ripped out of the wall, and make an offer for it, assuming you'll be able to get the bank to "fix" the issue later. Usually, if the bank is willing to do any repairs to a foreclosed home, they do so, on the advice of the listing agent, prior to the home being listed.
Out of hundreds of foreclosure transactions I have personally been involved in, I have seen exactly four where the bank did agree to do some level of repairs at a buyer's request. Every one of those times, the repair was to fix a health-and-safety endangering property defect, like a gas-leak or an electrical fritz. And every one of those times, the property defect was highly non-obvious - not something even a diligent buyer could have detected visually prior to making an offer. Maybe another few times I've seen a bank agree to a small price reduction due to surprising condition problems. And dozens of times, I've seen transactions fall apart or buyers take on the property’s repair costs, when they request repair credits, price reductions or actual repairs from the ban seller.
If a foreclosure you're considering has obvious property damage, have your contractor stop by with you or gather whatever information you need to get as comfortable as possible with your offer price, assuming that the bank will not be chipping anything in for repairs, before you make the offer.
2. The bank speaks no evil. When it comes to real estate disclosures, the fact is, the bank speaks not much of anything! Many states exempt banks and other types of corporate homeowners from making substantive disclosures about the condition of the property. Even in jurisdictions where the bank is not legally exempt, most banks will simply write across the required disclosures something to the effect that the bank has no knowledge of the property's condition. (Before you protest with a "that's not fair!!" keep in mind that the bank never lived in the property, so most often truly does have no idea of any important facts or details about its condition or location, the things an average home seller would be required to disclose.)
Even in a normal transaction, it behooves a buyer to be thorough in having the property inspected and meticulous about reviewing the resulting inspection reports. But buying a foreclosure ups even that ante, as you have no seller disclosures to highlight particular problems you should have looked at, and none of the usual legal recourse you would have if a “regular” seller made incomplete disclosures. Get a property inspection. A pest inspection. A roof inspection. A sewer line inspection. A pool inspection, if you have a pool and care about its condition.
Yes - all these inspections cost money, but the drama and thousands each of them can save you is well worth it. And read your state’s buyer inspection advisory or similar document (ask your agent), just to make sure you’re aware of all the inspections that are available to you, and work with your agent to determine which ones make sense, and which are not appropriate.
Some insider tips:
• Vacant foreclosures often have their utilities disconnected. Work with your agent to make sure the utilities get turned on - even for a single day - so that your property inspector can run the water taps, test the stove and dishwasher, see if the water heater and electrical outlets work, and so forth.
• If appliances are there, the bank will probably leave them there, even though they may not have technical “legal” ownership of them, so they may not be included in the contract, like in a "normal" home sale.
• However, the bank will not give you any sort of warranty on appliances, so try to obtain any warranty coverage you want or need elsewhere - from a home warranty company or, potentially, the original manufacturer/retailer.
3. The contract terms, they are a changin'. One thing squarely in the wheelhouses of local real estate pros are local market standard practices. From negotiating practices to which party pays which closing costs, every market is different, and experienced local agents are experts on this information. If you’re buying a foreclosure, though, the bank will often require you to use it’s own purchase contract, rather than the more commonly used state forms. Many times, this is done to advise the buyer of the bank’s refusal to make substantive disclosures (see above) and to change some of the normal practices for your area to the bank’s standard practices.
For instance, if you are buying a home in a contingency state, where you would usually have to sign a document proactively releasing contingencies, the bank’s contract will probably change that, so that your transaction operates on an objection period. In "objection" based transactions, you have a certain period of time in which you must either speak up about your concerns with the property and/or cancel the deal, or you will automatically be presumed to be moving forward with the deal and your deposit money will be forfeited if you change your mind after that date.
If you’ve been making offers on non-foreclosures on the standard contract form, or you’ve bought homes before and think you know the drill, please - I implore you - READ every word of the contract you sign when you buy a home from the bank, and ask your broker, agent or attorney to explain anything that doesn’t make sense.
4. Expect the unexpected. When you buy a foreclosure, you might end up working with the bank’s escrow company, instead of a company you or your agent selects. And the bank's escrow provider might be slow or disorganized. C’est la vie. The bank might rush you for your deposit money, but take their own sweet time coming up with the necessary signatures on their end to close the deal. Par for the course. You might expect that the bank would be desperate for buyers, and instead find out that there are 20 offers on the same REO. Or, you might be the only offer and still get your aggressively low (but still reasonable) offer rejected, only to have the bank reduce the list price of the home to the same price of your offer! (They often want to see if exposing it to other buyers at the new, lower list price might generate more interest and higher offers.)
When you’re buying a foreclosure, expect glitches, expect your calendar to be derailed, expect the bank to be inflexible and possibly even unreasonable. It’s not overkill to ask your broker or agent to brief you on the common complications they see in REO transactions. Having realistic expectations may keep you from pulling your hair out. And if the transaction turns out to run smooth as silk? You’ll be pleasantly surprised.
By Tara-Nicholle Nelson | Broker in San Francisco, CA Ask Tara @Trulia
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