Searching for a new house can be a daunting undertaking. In the current market, there’s has been an increase in home buyers and investors in the foreclosure industry as they anticipate finding excellent deals on properties in ideal condition. However, failing to do your homework can lead to purchasing a foreclosed property that could lead to more stress than it should. As a potential home buyer, you should get into the process with more knowledge and more long-term vision.
So, What’s a Foreclosure?
Simply put, a foreclosure occurs when a homeowner stops paying their monthly mortgage bills. More often than not, a bank or a lending institution will file foreclosure paperwork after a period of 3 to 4 months past due. The homeowner is then forced to leave the home and the institution repossesses the property. It is then listed as Real Estate Owner Property or REO for sale directly by the lending institution, you can check the Hillsborough county tax records as well.
This is when a home is still under ownership by the buyer, but late by 3 months or more and is expecting foreclosure soon.
This is when the owner asks the lender to accept less than what they owe in order to sell the property. Short sales are different than the conventional home purchasing process. If you submit a short sale offer, the homeowner has to take the offer to their lender and find out if the institution is willing to accept the sale. This can take anywhere from weeks to several months and this usually scares off potential buyers.
So, what are the reasons why people get their homes foreclosed?
- Fired from job, unemployment or loss of income
- Inability to pay HOA dues
- Medical conditions that don’t allow the owner to earn income
- Divorce and other legal matters
- Huge debts and other bills that may have overwhelmed the homeowner
Tips to Acquire Foreclosed Homes in Hillsborough County Ohio
When banks take over a property via foreclosure, they usually want to sell it as soon as possible and since they are not in the real estate business, they avail brokers for assistance in marketing these properties. As such, acquiring a foreclosed house through the MLS can be a bargain, but if you fail to do your homework, it can ideally be a problem-filled procedure. That being said, here are a few tips to help you make a smart purchase.
Choose a Foreclosure Sale Professional
Banks and lending institutions rarely sell their foreclosures directly to buyers. They usually list them with real estate agents or brokers. You can work with an agent who specializes in foreclosed properties or have a buyer’s agent find the homes for you. To find a foreclosure sales expert, contact local brokers and inquire whether or not they are a listing agent for any financial institutions.
Regardless, it is important that you ask the specialist how many properties they have sold and how many home buyers they have represented in a foreclosed home purchase. Also, ask how many of those sales they closed recently and exactly who they represent legally.
If the real estate agent represents the bank, do not reveal anything you do not want the lending institution to know, such as whether you are willing to spend more than you initially offered for a property.
It is possible for the former owner of a foreclosed property to challenge the process in court, even after you have closed the sale. As such, ask your real estate agent to recommend a lawyer who specializes in real estate and has worked with lenders selling foreclosed properties before.
Have the lawyer explain the foreclosure process in Hillsborough County Ohio and the risks involved in buying such homes. Set aside at least $5000 to cover the possible legal fees.
Get Your Financing in Order
Most mortgage companies require potential home buyers to submit pre-approval letters with a buying offer. Since most of the foreclosed properties are vacant, it is possible to quickly deal with the closings. So, ensure that you have the money you will need to close the property purchase.
Work With an Agent to Set a Price
It is also wise to ask your agent to show you closed sales of similar homes in Hillsborough County Ohio, which you can use to set your price. Begin with an amount that is well under the current market value as the lender might be in a hurry to liquidate the property.
Expect an As-Is Sale
Most people halted making repairs and maintaining their homes way before they fell behind on mortgage payments. As such, it is important to ensure that you have adequate money left after the purchase to make the minor and sometimes major repairs and renovations.
Although some lending institutions conduct small cosmetic repairs to make the foreclosed properties more marketable, they will not give you credits for the costs of repair or even make additional repairs as they have already factored in the home’s condition in the asking price.
Most lenders will ideally expect you to buy the foreclosed home as-is, meaning in its current condition. In such cases, you should protect yourself by availing a home inspector to uncover the real condition of the property, purchasing a property warranty and getting a pest inspection.
Also, ensure that you conduct all the environmental testing that is common in the region to find hazards like mold, radon, lead-based paint, etc.
Do Not Expect Profit From a Quick Sale
People who purchase foreclosed homes intending to do as little as possible in terms of improvements, hoping to sell for a profit may find it hard in the current market. The local government is known to crack down on neglectful homeowners, giving penalties that increase with time. Unmaintained houses also tend to lose value pretty quick. As such, you should always plan to do some improvements to a property even if you are looking for one in an ideal condition. By doing this, you also get the satisfaction of helping turn around the neighborhood.