Posted by: Roby Robertson | November 6, 2008

Lake Norman Real Estate;The Risk-Rewards of Buying Foreclosures

Buying a Lake Norman Foreclosed Home Offers Risk/Rewards

In some respects, buying a foreclosed property is like purchasing any other home.

You want to get the largest house for the least amount of money in the best location possible!
In other ways, the foreclosure market is an entirely different world. With foreclosures, it’s always buyer beware!

I have written numerous posts about the availability of short sales and foreclosures on this site. You can search for Lake Norman foreclosure or just foreclosure to find other posts on the subject.

According to RealtyTrac, an on-line foreclosure marketplace, lenders repossessed 197,800 U.S. homes in the first four months of 2008 compared to 90,800 in that period last year, an increase of 118 percent.

Banks don’t want those homes, and will sometimes accept much less than fair market value to get them off their books. Often times buyers can buy a foreclosed property in the Lake Norman Area for as much as 20 to 25 percent lower than fair market value. Sometimes more, sometimes less, depending on location and condition and the value the agent has listed the house.

And while loans are sometimes hard to find, they are still being made, especially if you have good credit. While the qualifications for getting a loan are becoming stricter, mortgage money is still cheap by historical standards and is likely to remain so in the near future. The Mortgage Bankers Association projects that 30-year fixed rates will hover around 6 percent for the rest of 2008 and for at least the first two quarters of 2009

The price might be right, but buying foreclosed properties often has drawbacks. Anyone thinking about buying a foreclosed property, either to live in or as an investment, should be extremely careful and with their agent, do plenty of due diligence.

Following are some things anyone considering purchasing a foreclosed property needs to know:

FORECLOSURE

Foreclosure is the final step in a process of a lender trying to recoup money from a borrower who has defaulted on a loan. The bank either sells or takes back the home, resulting in a foreclosure auction or bank foreclosure.

PRE-FORECLOSURE

In some cases, a buyer can find a home in pre-foreclosure and purchase the property from the owner before the lender forecloses.

Benefits to the buyer of a pre-foreclosure sale include getting the home at a discount (typically 10 to 20 percent below its fair market value), and being able to conduct a title search and inspections before purchasing the property.

Pre-foreclosure sales also benefit the homeowners because they are able to avoid foreclosure and salvage some of the equity in the house.

SHORT SALES

Short sales have been around for a long time but recently have become more prevalent in the Lake Norman area. Basically the seller is banking on his/her lender taking less than what is owed on the mortgage. Often times the seller authorized his agent to negotiate with the bank on terms that are acceptable.

Also, the seller will most likely have to provide documentation that he/she can no longer make the payments and it is in the best interest for bank to agree. Depending on the circumstances of the property value, condition, location etc. buyers can sometimes

Note: The Short Sale process can be long and drawn out so be prepared to wait!

BANK-OWNED HOMES

Buying a foreclosed home directly from a lender is generally considered the safest way to purchase a foreclosed property.

The buyer knows there are no other liens against the property, and can make an offer on the home subject to a home inspection. The buyer can also arrange for financing, even get pre-qualified for a mortgage.

Typically, a bank-owned property does not sell at as big a discount as a pre-foreclosure sale or an auction, but good deals can be found, especially on properties that have been on a bank’s books for 90 days or longer.

There are various online databases that list bank-owned real estate. You can also work with a local real estate broker, or contact the lender directly. Note that many lenders will work only with real estate professionals.

RISKS, REWARDS

Work with a qualified buyer’s agent, get a survey and every possible inspection done, and hire your own real estate attorney.

Are the risks worth the potential rewards? Absolutely!  Under the right circumstances, you buy a foreclosed house or short sale for $70,000, spend $15,000 fixing it up, then sell it for $120,000. Where else in today’s economy are you going to find a better investment?

Some of this information courtesy of the Hickory Daily Record.

See the latest list of properties at Looking for Lake Norman or Charlotte Area Condos or Waterfront?

If you would like a list of potential properties, please feel free to contact your Lake Norman Agent at 704 451 7051 or by email.

See Also:

Check out the latest list of short sale opportunities

Lake Norman Relocation, You Will Want to Consider It

Why Lake Norman is such a great Destination

Roby Robertson

 

Saving My Clients Thousands

Broker/Owner

 

Real Living In Style
Davidson NC

 

roby.robertson@realliving.com
www.LakeNormanRealLiving.com

 

Ph: 704 451 7051
Fax: 704 892 9766

Committed to Saving My Clients Thousands When Buying and Selling Real Estate

 

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