Buying a Foreclosure: 5 Dos to Start Off on the Right Foot

Mary Boone, Zillow — Mon, 24 Sep 2012 11:00:25 +0000

At first glance, foreclosed properties appear to be the kind of bargains you simply can’t pass up. For some, it’s true: Buying a foreclosure can be a terrific investment opportunity. But beware; there often are a number of challenges along the way. These five "dos" should get you on the right track as you begin your buying quest: 1. Do your homework. Read everything you can get your hands on, attend seminars and seek the advice of foreclosure investors. Learning the lingo and understanding the basics of the process will better prepare you for the journey. Additionally, you need to research neighborhoods before you buy a home. What are the schools like? What about crime rates? What have other properties in your desired neighborhood sold for? 2. Do keep an open mind. The current real estate market is certainly chock-full of competitively priced foreclosures. But the same can be said of traditional listings. Traditional sellers may be more flexible about taking care of repairs or negotiating price, and you likely won’t have to assume the previous owner’s overdue debts or liens. Plus, by narrowing your search to foreclosure homes only, you may not end up in your dream neighborhood or your favorite style of house. Being open to many options will ensure you end up with the best house for your money. 3. Do find an experienced agent and attorney. The foreclosure market is complex. Whether you’re looking at a pre-foreclosure, short sale or bank-owned property, you’re going to need the guidance of a professional who has experience buying and selling these types of properties. That doesn’t mean someone who has read about the process. You want to work with someone who has gone through it and knows what can go wrong. Besides, a real estate agent who specializes in foreclosures likely will have long-term relationships with area lenders, so they’ll hear about properties that haven’t yet been officially listed. Foreclosure laws and regulations are tricky, and they vary from state to state. A real estate agent can help you locate properties and make offers, but – unless he is also a practicing attorney – you cannot rely on him for legal advice. Be prepared to consult with a local real estate attorney who understands how these purchases work. 4. Do get prequalified. It doesn’t make sense to fall in love with a home that’s twice what you can afford. If you’re serious about buying, go talk to your lender before you even begin your search so you know how much you can afford to borrow to buy a home and exactly which price point you should be targeting. Even better: Get preapproved. That way, you can move quickly when you decide you’re ready to buy. 5. Do think beyond today It’s best to approach any real estate transaction with a long-term perspective. If your plan is to flip the property and quickly resell it, you need to ask yourself: What happens if it doesn’t sell for six months or a year or longer? Do the math: How long can you afford to carry this property before all your profit goes down the drain? If you plan to live in the house, do some math and determine what it will cost you to remodel and repair the property. Often, lenders are willing to loan money for the property but not the repairs. Can you afford to make this property your dream home? Can you handle the work yourself, or do you need to hire someone to do the repairs? Do you have a realistic idea about these costs? Do the math or you may suffer long-term financial repercussions.

Mary Boone is a writer for Zillow, a home and real estate marketplace dedicated to helping homeowners, buyers, sellers, renters, real estate agents, mortgage professionals, landlords and property managers find and share vital information about homes, real estate and mortgages.

Recommended by the Editor:

5 Things to Know About a Neighborhood Before You Buy a Home

Mary Boone, Zillow — Wed, 01 Aug 2012 10:15:08 +0000

You just bought the cutest house in the quietest neighborhood — or so you thought. Unfortunately, you did your house hunting in the winter, and now that the weather has warmed up you’re realizing the street is populated with teenagers who blast music through open windows and dozens of kids who routinely race their bikes through your yard. In the National Association of Realtors' 2010 Profile of Home Buyers and Sellers, buyers ranked quality of neighborhood (64 percent) as the most important consideration when selecting a place to live. While it may not be possible to know everything there is to know about your neighborhood before you move in, a thorough investigation will help ensure you are moving into the right environment. Be sure your research includes these important criteria:

Crime rates

Visit crimereports.com, a website that provides visitors with free up-to-the-minute crime maps and crime reports for specific areas. The site offers a free mobile download and, if you choose, will send free crime alerts on a regular basis. Also, make time to talk to the community resource officer for the area. Your city may have a different title for this position, but it’s essentially someone who works as a liaison between the police and neighborhoods. Your community officer can provide information about property and violent crime trends for an area and may even be able to provide crime report printouts. For small communities, you may need to check directly with the police department.

National Sex Offender Database

The police will be able to provide information about registered sex offenders living nearby. You should also check out FamilyWatchdog.us, a free database that allows you to search by street name or city. The site provides information — often including a photograph —about offenders living in the neighborhood.

Noise and traffic

Your home search may not span months, so that you can learn about summertime vs. wintertime noise. But you should plan to visit the neighborhood at all times of the day and night. Check out traffic patterns during rush hour. Are some streets more dangerous because of this traffic? What’s the neighborhood like at midnight on a Saturday? Is there a church nearby that eats up all the Sunday morning parking? Are you so close to the airport that you hear the roar of planes? Talk to multiple neighbors: Does the neighboring park host festivals that might create parking and noise issues? Ask when they think the neighborhood is at its wildest and, if at all possible, make a visit at that time.

Schools

You don’t have children, so why should neighborhood schools matter? Two main reasons: You may have children in the future, and good schools ensure consistent demand for properties — and higher resale prices. Websites such as Education.com and GreatSchools.net allow you to search schools by ZIP code, city, district or school name. These sites provide information about test scores, student-to-teacher ratios, student demographics and more. Because private schools aren’t required to release test scores, the sites provide fewer statistics about them. Ask neighbors for their thoughts on area schools and conduct Internet searches for articles and reviews about them.

Public services

When you drive through a potential neighborhood, do you see signs that the city is having financial trouble? Are streets clean and well maintained? Are parks clean? Are there sidewalks? Is public transportation available nearby? Where are the nearest police and fire stations? Have libraries been shuttered? Declining property tax rolls have forced many towns to cut back on public services. Are you comfortable with the level of services available in this neighborhood? An outdated kitchen or bath can always be remodeled, but neighborhoods are more difficult to change. Do your homework so you end up buying a home in a location that’s right for you and your family. You Might Also Like:

Mary Boone is a writer for Zillow, a home and real estate marketplace dedicated to helping homeowners, buyers, sellers, renters, real estate agents, mortgage professionals, landlords and property managers find and share vital information about homes, real estate and mortgages.