Some home buyers look to the foreclosed property market for a bargain deal on a new home. It's not entirely surprising - the National Association of Realtors (NAR) reports distressed properties cost, on average, 20 percent less than standard homes for sale. However, those looking to buy a home to live in might find surprising competition from investors looking to purchase a bank-owned property - also called REO - that they will later sell, according to the Wall Street Journal. There are ways for home buyers to stay ahead of the competition and buy a foreclosed home before the investors do.
Hire a real estate agent with REO experience
The top strategy home buyers should keep in mind is how to pick the right real estate agent. Some have more experience than others when it comes to dealing with foreclosed properties, which could give home buyers a leg up on the deal. They can also help identify foreclosed homes that are in better condition than others, helping home buyers find properties that may not need a lot of work beforehand and that may require less maintenance over time, reports the Wall Street Journal.
Consider government-owned
Freddie Mac, Fannie Mae and the Department of Housing and Urban Development (HUD) have all adopted measures that favor owner-occupants, also known as regular home buyers, over investors when it comes to the buying and selling of bank-owned homes. According to HUD, only home buyers who are purchasing an REO to use as their primary residence can submit bids for the home in its first 10 days on the market. After that time period, investors can enter the fray. However, that week and a half advantage can make all the difference for a home buyer, reinforcing the importance of having a real estate agent who's familiar with the process and can act quickly on new REOs.
Handle finances ahead of time
According to HUD, it's advisable to secure a preapproval on a mortgage before shopping for an REO property. The Wall Street Journal also reports having financing prearranged can give home buyers the benefit of time, allowing them to process a REO sale all the more quickly. Investors often pay for REO homes with cash, leaving unprepared home buyers on the outside looking in. While these steps won't guarantee a home buyer won't be outbid for a foreclosed home, it can give them a good head start on their investor competition.
Brandon Jordan is a member and or certified with the following
Posts
