How to Get a Deal with Foreclosed Properties

Realtor Cindy Hollabaugh

How to Get a Good Real Estate Deal with Foreclosed Properties
By Mandy Marksteiner

Everyone likes to get a great deal.

Homebuyers in Los Alamos are no exception. Many people begin their online search by browsing for “cheap houses,” “real estate deals,” and especially “foreclosures”.

It makes sense to start your search this way. When purchasing a foreclosure, the owner is no longer involved and the buyer and the realtor only have to deal with the bank.

“You can get a better deal on a foreclosed house because the bank is not emotionally involved. A bank is more likely to accept a low offer,” said Cindy Hollabaugh, a Realtor with Zia Realty.

Are there foreclosures in Los Alamos?

Los Alamos is famous for having a large population of millionaires who live here. Naturally there are fewer foreclosures in Los Alamos compared to the national rate. Prior to 2007, foreclosures in Los Alamos County were rare. According to Bankrate.com’s July 2013 report, New Mexico has the fifth highest foreclosure rate in the country with one out of every 678 homes in the foreclosure process. That rate does reflect the current number of foreclosures in Los Alamos County.

“Foreclosures used to never happen in Los Alamos,” Hollabaugh said. “But when the real estate market bubble burst and the economy went down, we started to see foreclosures happen more often.”

Are foreclosures the best deals?

Most people looking for homes start looking online. One of the most popular searches involves foreclosures in the area they are hoping to find a home. 

A buyer can access a foreclosure two different ways, contact local banks for their REO (Real Estate Owned) list, or contact a local Realtor® to see what foreclosures have been listed by a bank with a Realtor®. A Realtor® will help a buyer with both situations and help the buyer navigate through the purchase.

Most buyers begin their search for a home wanting a good deal, monetarily, and specific physical characteristics of a home. In my personal experience, a buyer will ultimately choose the home they fall in love with, which may or may not be a foreclosed property.

The differences between a property owned by a financial institution versus and individual homeowner are the following:

  • The price a financial institution will sell a home for is purely a business decision with no emotion involved;
  • Usually the financial institution will sell the home in “as is” conditions and not be very motivated to do repairs;
  • Depending how long the property has been vacant there could be a lot of repairs needed

When purchasing a foreclosure a buyer needs to be aware of the costs that will be involved for repairs, if the institution is an out-of-town institution it could take longer than expected to close, and if there are any other charges, like unpaid real estate taxes that a buyer would need to pay. If a buyer takes all of the costs into consideration and they really like the house, then it is a good deal. If it is not a good deal, the buyer should keep looking with a Realtor® until the price and the property are right. A local Realtor® will help you find the answers to your questions about foreclosures and the process to purchase any property that is for sale.

How to find foreclosures

The Internet makes it relatively simple to find foreclosures. Foreclosures are listed with the Multiple Listings Service, and clearly labeled. When you go to mls.foreclosures.com you can enter any zip code and get a map and a list of each MLS listing of foreclosures in that area.

Banks have a section on their websites called “REO” that stands for Real Estate Owned, where they list all the properties that have been foreclosed. You can contact the bank directly about those listings.

In addition, most newspapers publish foreclosure listings in the Legal Notices section.

Three tips on buying a foreclosure

  • Foreclosure sales tend to move quickly, so it is a good idea to get prequalified for the loan right away.
  • It’s better to buy the house from the bank, rather than at an auction. That way you can avoid being held responsible for unexpected payments to creditors, having to evict the former owner, and being surprised by damages and expensive repairs. When you buy from the bank they will have already paid off any back taxes and you will be able to inspect the house before you buy it.
  • Since the bank will not complete necessary repairs before selling the house, factor maintenance costs into your budget. Once you’ve gone over the numbers the house might not be as good of a deal as you thought.

Why work with a Realtor?

Realtors are like matchmakers. They can cut through the noise of the market and help you find a house that you want to live in.

“I have never met a buyer who chooses a house on price alone,” Hollabaugh said. “People go into it looking for a good deal, but they always choose the house that they fall in love with.”

Cindy Hollabaugh is a Realtor with Zia Realty Group, 1460 Trinity Dr. Suite 1 in Los Alamos. Hollabaugh can be reached on her cell at 505.570.0136 or at her office at 505.662.8899.

Visit www.ziarealtygroup.com for more information.

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