Myths about Buying a Foreclosure!

A recent survey with american adults was conducted by Trulia and Realty Trac on foreclosure myths.  And here are some of the results.

1. Foreclosures need a lot of work.  92% of consumers expressed that if they bought a foreclosure they would be  willing to make improvements after they closed.  With 65% of buyers willing to invest 20% or less of the purchase price.  Although you hear many stories about missing plumbing, and air conditioners, there are many that have relatively inexpensive issues.  So putting in an offer on a foreclosure is not such a bad thing.

2. Foreclosures sell at massive discounts, compared to other homes.  Almost everyone taking this survey 95% felt that they would pay much less than a straight sale.  18% had realistic expectations of less than 25% discount.  However, 36% expected to receive a bargain of 50% off the value of the property.  Reality check:  While foreclosures might be discounted massively from what the former owner paid or owed,their discounts are much more modest when compared to their value on today’s market and the prices of similar homes.

3. Buying a foreclosure is risky.  49% americans said they perceived buying a foreclosure as risky.  And yes buying a home at an auction on the courthouse can have riss.  But most buyers looking for foreclosures are looking with an agent and are listed with the multiple listings and are “as is”.  So inspections can be done and if buyer doesn’t like results of inspection they can walk away.

4. There are hidden costs to watch out for.68% of the survey respondent there is a negative stigma to buying a foreclosure.  Again when you buy a bank-owned property that is listed with a broker, the closing costs are the same as the cost of a straight sale. Overdue property taxes, HOA fees, and other bills left behind by the defaulting homeowner are cleared by the bank.

5. Foreclosures are more liely to lose their value the a regular sale. 35% of the adults who believe there are downsides to buying foreclosed property.  Whether a home loses its value or not has to do with the dynamics of the local market, not with whether the home was or was not a foreclosure.

6. Most foreclosures happen when homeowners walk away.  Only 1% said waling away from their home would be their first choice.  59% of home owners said they wouldn’t walk away from their home no matter how upside down they were.  Most foreclosures happen when the owners lose their jobs or their mortgage adjusts to the point where they can not pay.  Voluntary walk aways are not as popular as many people think.

7. When trying to purchase a foreclosure yopu should low ball the bank.  You hear that banks don’t want to own homes but the real deal is that they’re not desperate enough to give these places away.  Also, the bank mostly service the default loans, they don’t own them.  Most of the bank owned that I see go for more than list price or at the list price.

8. You need to pay cash.  Some bank owned list cash only but most are of them are sold with buyers getting a mortgage.

9.It’s easier to buy a foreclosure with bad credit.  No one is going to be able to purchase a home of any kind with bad credit.  Especially all the changes the banks and lenders have done.  It’s harder now more than ever to get qualified.

This survey was very interesting and I hope it gave you a better insight on how the foreclosures, REO and bank owned properties are handled and sold.

Advice on Foreclosure Services

With the rise in the number foreclosure in the US soil alone, some people still made business out of this tragedy for some people who are about to lose their precious homes.

Foreclosure services popped up like mushrooms trying to get clients out of these people who need foreclosure advice. Be even more careful as others are scams and can ad injury to your stressful moment.

Before you get on that phone and dial the number of the foreclosure advice advertisement that you saw in the morning paper, read about these note- worthy advice:

1.Do not pay. This is in the context when a foreclosure service provider wants you to pay a fee the moment you called them up. They are usually those fly by night service providers that just get your money and disappear even before you get a taste of their service.

2.Mix them up. Legitimate foreclosure service providers should be on the case. Reputable ones are good. Mix them up together, that is what you want to be asking services from.

3.Be as difficult as possible. This means that before you sign any contracts or paper work, you should be very difficult in the sense that you will read and question any vague conditions. This is your right to clear out ambiguous things.

4.Never give away your home. Of course you hired foreclosure service to help you keep your home. However, there are reports of certain service givers that will get you signing a contract to giving your home to them and you rent while they promise to give the house to you back after you completed the payment.