Lots of people are talking about foreclosures these days. There are those with variable interest rates on their mortgage that are worried about loosing their home to foreclosure and there are those who hope to buy foreclosures at a bargain price. I have a few pointers for those considering buying bank-owned and government owned foreclosed property.
First off, budget for extra closing costs. In the Rochester area, it is normal for the seller to pay for a survey, updating the abstract and transfer tax. With foreclosures, most banks and government agencies will NOT pay these expenses and so they must be paid for by the BUYER. Transfer taxes on a $100,000 home run $400 and survey and abstract could cost in excess of $1000. You will also want to be sure there are no back taxes due on the property.
Foreclosures are almost always sold in "as is" condition and not all foreclosures are a good deal. Often, when a homeowner is struggling to keep up with mortgage payments they will neglect important maintenance schedules. When buying foreclosures, it helps to have a working knowledge of what are minor repairs and what costs a fortune to fix. When doing an engineer inspection of a foreclosure, if the utilities are off, the buyer must turn them on in his name and then turn them off and re-winterize the property after an inspection.
Finally, the best place to search for foreclosures is in the normal websites that feature all the mls listings. (http://www.rochestersbesthomes.com/ is my favorite!) Services that charge to send you foreclosures are making money on information that is out there for you for free. You can recognize most foreclosures by the language in the listing. Some of the common phrases in foreclosure listings are: "Buyer to verify all information including zoning and C of O ordinance", "Proof of Funds with offer", "To be sold in 'as is' condition", "Seller Will Not Provide Abstract, Survey or Searches" and "Taxes Estimated." If you suspect that a listing is a foreclosure, have your realtor check so that you can budget for the extra closing costs.
For additional information about buying foreclosures, give me a call at 585-414-5513.
Mary Shelsby, Re/Max First