Homeowners (or prospective homeowners ) often resort to buying a foreclosure after exhausting all other options for properties. This phrase refers to the process of purchasing a property that has foreclosed due to the most recent owner’s default on his (or her) mortgage payments. Knowing what questions to ask when buying a foreclosure can make a big difference. A foreclosed home can usually be bought either during a public auction or from a bank or other lender. According to the Mortgage Bankers Association, roughly 250,000 families in the United States witness their homes foreclosed every three months. Additionally, 1 in 200 homes in the nation is expected to face foreclosure each year. For Washington, D.C., this means around 3,000 people will lose their properties for this reason.
Questions To Ask When Buying A Foreclosure
With all this in mind, it’s important to know certain facts about your local real estate market. Here are five essential questions to ask when purchasing a foreclosed home.
What Length Of Time Has The Property Been On The Market?
A commonly accepted truth in real estate is that high-quality homes in up-and-coming neighborhoods are usually bought quickly (within 30 days).
On the other hand, properties in weaker conditions — or in regions affected the most during a housing crisis like the one from 2008-2009 — often stay on the market longer. This means prospective buyers can benefit from greater flexibility regarding price. Most lenders dislike having to deal with a foreclosed home for more than 90 days, so they will work hard to discuss value with a reliable buyer. The buyer in question could end up saving up to 15 or 20% in these cases.
Is The Current Price Comparable To Similar Structures Nearby?
Most people tend to use their home’s price per square foot in order to estimate the property’s value. Comparing the average values of homes (especially those sold in the last two or three months) in your zip code by using this metric is highly recommended. You can then multiply this figure by your property’s “livable area.”
Of course, if your desired home is in pristine condition and no repairs or fixtures need to be completed, paying a market-average sum per month is excellent.
Is The Asking Price Sufficient For The Size And Condition?
It’s obviously important for any real estate transaction to be completely fair to both the buyer and seller. This entails ensuring that a property’s asking price is reasonable given its condition and size.
Additionally, buyers who pay cash for a home see their offer end up as a priority among all the other offers a lender receives. Those who decided to take out a mortgage loan can enjoy greater price flexibility, as the down payment is usually expected to be around 20% of the home’s value.
Are There Other Foreclosures In Proximity? If So, How Many?
A high number of foreclosures near your soon-to-be-home often implies an imminent decrease in value. Websites like Zillow and Redfin are great for checking this type of information.
Will You Still Make A Profit From This Purchase?
New homeowners are often advised to keep at least an additional 20% of their property’s value stored to prepare for unforeseen events. Sometimes, issues in a home (whether they concern wallpaper, furniture, appliances, or landscaping) aren’t noticed until after a home inspection. Banks are occasionally willing to cover escrow fees (or any other similar costs) in order to help borrowers.
Don’t hesitate to ask for help with your foreclosure purchase.
Speak To Mathis Title For More Information
Reach out to the experienced professionals at Mathis Title Company to learn more about what questions to ask when buying a foreclosure and what to take note of before purchasing a foreclosed property. Although based in Fairfax, Mathis Title serves customers in many other parts of Virginia, including Alexandria, Arlington, Centreville, Chantilly, and McLean.
Mathis Title’s services include contract preparation and review (i.e. drawing up a purchase agreement that is fair and detailed), assistance with mechanics lien, refinancing, settlement and real estate closing, and title insurance (i.e. ensuring clean titles during the transfer-of-ownership process).
Robin Mathis is an attorney who boasts more than 35 years of experience and who was sworn into the U.S. Supreme Court. The thousands of closings she has completed include both small commercial and residential properties. She is also highly knowledgeable about estate sales on both the buyer and seller sides of real estate transactions.