And we are CLOSED! After 7 months of house hunting, we finally found the perfect match. My clients opted to buy a property that has "great bones" and needs a little TLC. It will definitely be
Popular Question: What is a Foreclosure?
Dated: August 28 2019
This is truly one of the most popular questions that realtors come across on a weekly basis. If you find this surprising, think of the following scenario: you are a young twenty or thirty-something year old just starting out in a new career, maybe you recently tied the knot (if this applies to you, congratulations!) too. Wouldn’t it be the perfect time to start looking for a house? Afterall, you are tired of renting and paying someone else’s mortgage. Does this sound like you? If so, you are definitely not alone. In fact, thousands of others are in a similar position.
You tell yourself the next step is to start looking online: Zillow, Realtor.com, Trulia. You start seeing large colonial homes nestled on an acre of land in northern New Jersey selling for roughly $80,000-$150,000. If you are thinking this sounds too good to be true, that is because it is. Usually these homes are bank-owned or real estate owned (REO) properties. The word foreclosure actually refers to the legal process the mortgage lender initiates to take possession of the property when the owner has failed to keep up the mortgage payments for a period of time.
By the time you see these properties listed for sale online, they have been vacant for quite some time. As a result, they are in extreme disrepair and the bank has most likely “winterized” them which involves shutting off utilities. As the bank has lost a great deal of money on the property already, there is almost no room for negotiation like there would be with a homeowner looking to sell his/her home. These properties are sold in “as is” condition which means that if anything fails inspections, the prospective buyer would have to absorb the total cost of all repairs/replacement in order to move forward with the purchase. Finally, in order to do inspections and have the house appraised, this buyer would need to pay for the utilities to be turned back on for the duration of this transaction.
Yes, this process would require significant cash up front and there is no guarantee that you will end up as the new homeowner. And as you have probably guessed, you wouldn’t see this money again. REOs are perfect for contractors and investors, but for the majority of house hunters out there (especially first-timers), the safest bet is to keep stockpiling your money away until you’re able to find yourself a home that has been lovingly maintained over the years. One that doesn’t have mold and the lights will turn on when you go to flip the switch.
As cheesy as it may sound, one of Cami's all-time favorite quotes is partially to blame for her decision to become a real estate agent: "The best journey is the one that takes you home." Giving up a n....