How to buy foreclosures
How to buy foreclosures is at the question at the top of the list for many home buyers these days. Here I will outline a few short points for you to follow in your search for buying foreclosures. In most of these cases you need to find an agent that specializes in foreclosures to have the best results. Going directly to the bank is a waist of time. You will be directed to find an agent. Beware of any list that are sold describing foreclosure details. Many of these listings are premature and can put you in an a unsavory situation if you go knocking on any doors and find the home owner still there.
Tax lien foreclosures can be purchased with cash at the court house steps. You must have a cashiers check to purchase a home that same day if you want to buy a home for cash (NO LOANS). Check with your local court house for procedures. Some Realtors may offer help for a fee in doing this. Be sure you know what you’re doing there could be additional taxes owed, condemnation of the property, additional liens and more.
HUD home foreclosures must be purchased through an agent/broker. You can search for HUD foreclosures at Bid select.com but you must have an agent/broker submit the bid for you.
Fannie Mae home foreclosures will be listed with a local broker in the area you are shopping. Any buyers agent with mls access can show you the home and submit Fannie Mae bids for you.
Bank Repo homes. This includes all banks, Bank of America, Wells Fargo, Chase etc. These listings will also be with a broker/agent.
Buying a foreclosures can be a complicated task. If you are serious about buying a foreclosed home do your home work on getting signed up with an agent that is trained in foreclosure sales. SFR stands for Short Sale and Foreclosure Resource. This means the agent has advanced training in dealing with foreclosures and short sales. Chances are even if you do not ultimately end up buying a foreclosure you will have an agent with experience.
Good Luck!
Krishna Perkins, ABR, SFR, New Home Certified
Covenant Partners
http://www.sahomelocator.com
Buying foreclosures
Buying foreclosures is a hot topic for first time buyers. Here in San Antonio the first most asked question I get from first time buyers is “What kind of deal can I get on a foreclosure?” The second most asked question is “If I get an inspection can I negotiate a lower price for repairs?”
To answer the first question. Right now the average sales price to list price ratio is 97.1% for foreclosures sold in the last two months as of today July 23rd. This means foreclosed homes are selling on average for 2.9% less than current list price. In some cases the sales price is much lower than list price in others the sales price actually higher than the list price. HUD foreclosures are currently running a special first time buyer program that allows buyers to purchase a home with as little as $100 down payment. The buyer still has closing cost but this program has been such a success that buyers are finding themselves in competition with multiple offer situations. Buyers can also ask for up to 3% closing cost for HUD homes. The biggest twist this prgram brings to the market is that the buyers must offer a full price offer to get the $100 down program. With that in mind I think the foreclosure market is a great place to start looking for deals that might fit buyer needs here in San Antonio.
In reguards to repairs or reduction in price. Don’t hold your breath. Be prepared to pay for all repairs out of your own pocket. In some cases buyers can find a Fanne Mae home that offers a rehab loan or a HUD that has a repair escrow already attached to the listing for a specific repair HUD has identified as a must fix.
Covenant Partners
http://www.sahomelocator.com
HUD homes in San Antonio
foreclosed home
HUD homes in San Antonio have been selling like hotcakes. While the now expired tax credits helped sell some of these homes the HUD $100 down payment program that is still in effect is largly responsible. Without the $100 down program, buyers are required to bring a down payment of 3.5% to close in addition to closing cost that can run as high as 6% under an FHA loan. HUD also offers 3% closing cost on top of the $100 down program. Buyers with low cash reserves have been buying up homes in the San Antonio area at a quick pace. Over the last 6 months as of July 13, 2010 Hud homes are selling on an avg of 47 days. See the previous 6 months of sales here. If considering a HUD home buyers should consider all options and steps in this transaction with care. Speak with your agent in detail about the pros and cons of this type of transaction or give me a call.
Covenant Partners
http://www.sahomelocator.com
FHA Policy Changes
FHA Policy changes are right around the corner. The largest key change home buyers should be aware of is seller concessions. Beginning sometime this summer home buyers can only get up to 3% in seller concessions instead of 6%. This will dramatically change the cash requirements borrowers are accustomed to at closing. To view the other FHA changes click here.
Covenant Partners
http://www.sahomelocator.com
NACA
In todays mortgage climate many buyers who would normally be able to purchase a home have gone into hiding until the financing loosens up or the buyers can make the necessary changes to meet the new expectations. What many buyers don’t know is that their is an alternative.
I have sent many of my buyers through this program and I have seen some amazing results. NACA is a non profit organization making housing affordable to more Americans. They have attacked unfair lending practices in the past and continue to do so today in the refinancing of balloon mortgage notes. You don’t hear about them much unless the local news is covering them because of the non existance of advertising.
There are some pros and cons to working with NACA you need to be aware of. I’ll start with the pro’s first: #1 no credit score requirments #2 You can buy your interest rate all the way down to zero #3 The lender pays all closing cost, down payment and title policy. This results in a zero down home purchase. #4 You can use this loan for any home purchase up to 205K, new, used, reo, hud, etc.
Ok, now for the cons: #1 it’s a none profit so you need to keep your apointments, and stay on top of your paper work with them or you will get lost in the shuffle. #2 You have to attend a four hour work shop on a Saturday to get started. Many people get lazy on this and never go. #3 The program is not available in all states yet. You can view this info on the website. #4This really isn’t as bad as it sounds, but they require you to attend up to 5 events or refer to them 5 people a year. I do not believe they hard line this requirment but I believe the interest rate and terms are worth the effort for any buyer.
My recommendation for anyone considering this program is to have a Realtor refer you to the program. I do it all the time. If you go in alone without a realtor you will automatically have to work with one of their in house agents who is required to kick back 33% of the commission to NACA which leaves you with little to no wiggle room to negotiate other items important to you. Items you may need may include: lease buy out options, relocation fee reimbursment, appliances etc. If you’re unsure how this works let me know and I’m happy to explain requardless if you use me or not.
Merry Christmas and Happy New Year to all!!!
Krishna Perkins
