Buying a foreclosure is appealing to those trying to stretch their dollars. Finding a good one can be the challenge.
"The vast majority of the banks don't want us to advertise them as 'bank-owned' because it comes with a negative connotation," said Ryan Melvin, co-owner of More Realty Group in Las Vegas.
That means no sign on the front lawn indicating the home is anything other than a traditional sale. A buyer probably won't find a property advertised as a foreclosure on marketing materials, said Melvin, who specializes in real-estate owned properties, or REOs, those that have been reclaimed by a bank typically after a foreclosure auction.
Add that to a decline in foreclosure inventory in some areas and finding a property can be daunting. One option: Go to the bank.
Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties they have reclaimed. Do a Web search for REOs and lender. Contact information for the property's listing agents is usually provided for each entry.
For a fee, other sites will hunt properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 a month to search for just REOs.
Foreclosures.com charges $49.95 per month, after a free seven-day trial.
Otherwise, you might want to enlist a realty agent, particularly someone who works with REOs. Melvin, for example, is a member of the National REO Brokers Association, nrba.com, which has a searchable database of brokers. There's also the REO Network, reonetwork.com, which connects buyers with REO specialists.
After you've found a place, an inspection is crucial.
"We have all heard the stories of people ripping the copper pipe and wiring out ... people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall," said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa.
You don't need to be told the toilet is gone, but an inspector can tell whether there is damage 20 feet down the water line because of the way that toilet was removed, he said. Other issues could pop up from the property being vacant.
"When we live at home or drive the car, if something is off, we notice it. We notice it and we deal with it," Steward said. When a place is unoccupied, pests, for one, could become an issue.
A neighborhood environmental report might also be worthwhile, he said, which could reveal if the property was the site of a drug lab, for example.
The time it takes to complete the sale can vary from lender to lender.
But for your best chance at having an offer accepted and a quick closing, have everything in order before making the offer, said Duane Andrews, chief executive of Clear Capital, which provides valuation products for the mortgage and lending industries. That includes having the financing firmed up and writing a clean offer, he said.
Most bank-owned properties are sold "as is," so it's best to factor any work you want done into your offering price, Melvin said.
But don't expect to bargain way down, Melvin added. Banks typically price their properties at a 20 percent to 30 percent discount, he said.
Also, don't be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don't have to take the loan from their company, but they may want to make sure you're a solid buyer, Melvin said.
Above all, follow directions when submitting the offer, he said. That likely includes an approval letter from the bank and the correct amount of earnest money.
"The vast majority of the banks don't want us to advertise them as 'bank-owned' because it comes with a negative connotation," said Ryan Melvin, co-owner of More Realty Group in Las Vegas.
That means no sign on the front lawn indicating the home is anything other than a traditional sale. A buyer probably won't find a property advertised as a foreclosure on marketing materials, said Melvin, who specializes in real-estate owned properties, or REOs, those that have been reclaimed by a bank typically after a foreclosure auction.
Add that to a decline in foreclosure inventory in some areas and finding a property can be daunting. One option: Go to the bank.
Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties they have reclaimed. Do a Web search for REOs and lender. Contact information for the property's listing agents is usually provided for each entry.
For a fee, other sites will hunt properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 a month to search for just REOs.
Foreclosures.com charges $49.95 per month, after a free seven-day trial.
Otherwise, you might want to enlist a realty agent, particularly someone who works with REOs. Melvin, for example, is a member of the National REO Brokers Association, nrba.com, which has a searchable database of brokers. There's also the REO Network, reonetwork.com, which connects buyers with REO specialists.
After you've found a place, an inspection is crucial.
"We have all heard the stories of people ripping the copper pipe and wiring out ... people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall," said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa.
You don't need to be told the toilet is gone, but an inspector can tell whether there is damage 20 feet down the water line because of the way that toilet was removed, he said. Other issues could pop up from the property being vacant.
"When we live at home or drive the car, if something is off, we notice it. We notice it and we deal with it," Steward said. When a place is unoccupied, pests, for one, could become an issue.
A neighborhood environmental report might also be worthwhile, he said, which could reveal if the property was the site of a drug lab, for example.
The time it takes to complete the sale can vary from lender to lender.
But for your best chance at having an offer accepted and a quick closing, have everything in order before making the offer, said Duane Andrews, chief executive of Clear Capital, which provides valuation products for the mortgage and lending industries. That includes having the financing firmed up and writing a clean offer, he said.
Most bank-owned properties are sold "as is," so it's best to factor any work you want done into your offering price, Melvin said.
But don't expect to bargain way down, Melvin added. Banks typically price their properties at a 20 percent to 30 percent discount, he said.
Also, don't be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don't have to take the loan from their company, but they may want to make sure you're a solid buyer, Melvin said.
Above all, follow directions when submitting the offer, he said. That likely includes an approval letter from the bank and the correct amount of earnest money.
