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Tips on Buying Foreclosed Homes. Part 3    The Buying Process      

Fred Miller, Realtor 281/9242531

The "bank owned" properties are homes that went through the foreclosure process and are owned by the "banks".  These include Fannie Mae and Freddie Mae and Bank of America and other institutions.  Frequently they are listed with local realtors.  Do not expect a lot of help from the listing realtor because commissions have been lowered to incredibly low levels, and the realtor can not spend much time with you because he is very busy filling out the increased amount of paperwork involved.

 Some foreclosures are sold by auction.  There are local auctions by large national companies.  There are some online auctions.  Sometimes homes that are listed with realtors are taken away from the realtor and put in an auction.  It is impossible to tell what is going on.  You must put in a bid to find out.  Most auctions I have been to are a waste of time.  Other times I have seen incredibly good buys happen.  I have seen some really good buys in the upper end market--there is very little competition.   Good luck.  You usually are allowed to have a realtor and he will be paid 1% if you do the paperwork right.  Frequently you must put up money in "escrow" in order to bid.  Sometimes you are allowed to evaluate the house before bidding.

 Whatever the process the bank takes there are a few "rules of thumb".  You do it their way.  If they ask you to do something.  Do it, don't ask.  If you must fill out a Lead Based Paint Addendum on a house built twenty years after lead based paint was outlawed, just do it. 

 Don't expect huge concessions.  Base your offer on what the house is worth, not what it is listed for.  If there is a broad gap, then the house may stay on the market a while and you will have to be persistent and make repeated offers. 

 If the bank has not fixed up the house before you see it, more than likely they are not going to fix it.  The house will be sold "as is".  So if you want the house you must determine what the fix up cost will be and factor that into your offer.  The bank does not offer you a Seller's Disclosure regarding any faults.  They are excluded by law.  To cut them a little slack, they really don't know what has happened to the house in the past.  You must do your own "due diligence".

Part 1. What is a foreclosure?  Part 2. Government owned homes.

Fred Miller, Realtor 281/9242531

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