Searching For A Foreclosure? 5 Things You Need To Know

The Mountain Life Team Blogger March 15, 2011

Bank Owned Homes For SaleIf you are searching our Real Estate Listings in the North Georgia Mountains, chances are you are paying particularly close attention to Bank Owned Properties. Foreclosures are somewhat dominating the North Georgia Real Estate Market, and to me that is not necessarily such a good thing. As a matter of fact it is not a good thing as it continues to drive down home values in the Blairsville, Blue Ridge, Hiawassee and Ellijay. In some counties in North GAForeclosed Homes are making up over 50% of the Real Estate Sales while making up less than 10% of the Market Share.

Dealing with the frustrations of a Foreclosure Transaction has been on the agenda of most Brokerages Sales Meetings for the past year or so. It seems very few transactions dealing with Bank Owned Real Estate go smoothly. However, there are a few things that you need to be aware of that will better prepare you for the experience. And speaking of experience, it is always a good idea to ask your Realtor® how much experience they have had recently in dealing with Foreclosed Homes In Georgia. If you are not currently working with a Realtor®, I would very much appreciate the opportunity to assist you with all your North Georgia Mountain Real Estate needs.

Below are 5 Things You Need To Know before beginning your search for Foreclosures In North GA.

1. Foreclosures Are Not Always The Best Deal On The Market.

Foreclosure DealI can’t tell you how many times I get calls on my cell phone or in the office from potential Home or Cabin Buyers, and they ask me to send them ONLY Foreclosures that meet their criteria. What is it about the word “Foreclosure” that makes a Home Buyer think that they are the only good deals in the market? Is the media? Do you have other Licensed Real Estate Agents telling you that they are the best deals? What about Financial Advisers, are they telling you to buy only Foreclosures?

There are a lot of homes that are being offered on the open market by home owners that are really good deals. What about the custom and speculation home builders? They are doing everything they can to make ends meet and in doing so are building cabins and homes that they are selling at exceptionally great deals. However, the Bank Owned Homes are making it next to impossible for these builders to sell their homes at a profit margin that I would consider to be “making a living!” But they are doing it, and sellers that truly want to sell their homes are doing it because they do not have a choice. They have to compete with the Banks and the “Big Guys” Fannie and Freddie, but they are doing. I can say one thing for sure, it isn’t always easy for Real Estate Agencies and it’s Agents to convince the sellers that they have to sell their homes in most cases less than what they may have paid for it only a few years earlier. As I mentioned earlier, Foreclosures are currently making up less than 10% of the total market share. That means that 90% of the Homes and Cabins For Sale in the North Georgia Mountains are NOT Foreclosures. That not only gives you more choices, but it also gives you the opportunity to purchase a home and actually sit across the table from the person or persons you are buying it from. Surely out of that 90% of Properties For Sale, there has got to be some sellers that have priced their properties aggressively enough that they are standing toe to toe with the Banks and “The Big Buys!”

2. Purchasing A Property As-Is.

When purchasing a Bank Owned Property, you are purchasing it As-Is. Some buyers don’t fully understand exactly what that means. Not only does it mean that you are purchasing the property in most cases just as you see it, but more important than that is the fact that you are buying without Full Disclosure. What that means is that the Bank doesn’t know anything about the home, they haven’t lived in it and in most cases have never even seen it. So lets say that you walk into a Bank Owned Home and see some stains or maybe even patchwork in the sheet rock above the bathroom sink in the ceiling. Who can you ask what happened there? How long has it been going on? Has it been fixed? Let me answer that for you. Not a sole. Sure, you can and better have the home inspected, and that might give you some answers. But what if you wanted to know if the HVAC has ever had any problems, or if the Septic Tank has ever been serviced? What if you wanted to how old the shingles are on the roof? Who can you ask, your Realtor®? Will they know what the average electric bill was last summer when it got so hot? Doubtful anyone but the previous owners could answer that one for you. I think you get my point and hopefully this will put a little more light on the subject of As-Is. Also know that in my experience, requested repairs on Bank Owned Properties are rarely even negotiated, let alone agreed upon.

Foreclosures In Ga3. Pre-Qualification or Proof of Funds.

Almost every Foreclosure Listing within our MLS are now requiring with any offer a Pre-Qualification Letter or Proof of Funds. If you are paying Cash,  you can obtain either a letter from your Bank stating that you have have sufficient funds available for purchase or a statement of some sort with a balance in excess of the purchase price. Again, almost all REO Asset managers are now requiring this and will not even look at your offer without them. So if you are coming to the North Georgia Mountains with any intentions of purchasing a Foreclosure, make sure that you visit your Banker or Mortgage Lender, or speak with your Real Estate Agent before meeting with them.

4. Special Incentives Or Financing

Be sure that you are aware of any Special Incentives or Financing that may be offered on any of the Bank Owned Properties you are interested in. Most of the time the Listing Agent will state any incentives or special financing within the MLS Listing description. However there have been instances where it seems that the Listing Agent wasn’t or at least didn’t seem to be aware that there were any being offered on the home. So if you are in doubt, you can go to Fannie Mae’s website or Freddie Mac’s. There you should be able to determine if they are offering any specials on the property. If you are thinking of purchasing a Bank Owned Home that is owned by a local Bank, they best thing to do is to speak with your Realtor® about any possible incentives or special financing currently being offered.

5. You Gotta Have Patience.

PatienceSome Foreclosure transactions close right on time with little to no hassle at all, however most Do Not. From the beginning stages of your search until days and sometimes weeks after you close, Foreclosures can absolutely try your patience.  Issues such as an incompetent Real Estate Agent who cannot keep the status of a Bank Owned Property accurate on the MLS and Internet, to something as simple as being sure the Electricity and Water are turned on to the home for a Home Inspection. I could literally write an entire book on the challenges of purchasing Foreclosures in North Georgia or anywhere for that matter I am sure. Case in point, right now I am still waiting for signed documents back from the Bank on a property that I first made an offer for my clients back on February 19th. Just a few days shy of being one complete month and we are still waiting on the Binding Agreement. Now my clients are in danger of losing their Interest Rate that was locked when we wrote the offer, as well as being faced with paying a $100 Per Day, Per Diem for everyday that we could potentially go past the closing date that is within the contract. Sounds kind of like the IRS, you pay them interest and penalties if you pay late, but you will wait months and sometimes years for your return, and oddly enough they do not pay you any interest. Think we could get away with charging them a penalty?

Then you have the new FirstLook™ period. I can tell you this is NOT GOOD for the North Georgia Mountain Real Estate market, simply because we are a Resort Market known for our Vacation Homes and Rental Cabins. The FirstLook™ is typically a 15 Day period in which the property is only available to the end user, owner occupants. This means that the Real Estate Investors and Second Home Buyers will have to take a back seat until the FirstLook™ program is over. At such time, they then would be able to make an offer on the property. Yet another obstacle put in front of the Foreclosure buying process.

Now you might have picked up that I am a bit frustrated even while I write this article. Well guess what, you hit the nail on the head! I am. However, it is a BIG part of our market at this time and if I plan to continue my Success in Real Estate, I will build the patience of Job, or I will be missing the boat. I hope that you have learned a little about a few things you really do need to know and prepare yourself for when Buying A Foreclosure In North Georgia. Despite what you may be thinking, I would be grateful for the opportunity to assist you with ALL your North Georgia Mountain Real Estate needs, even if it is purchasing a Foreclosure. Actually you know what? Especially if it is Purchasing a Foreclosure.

Please Contact Me if I can assist you in anyway. Take care, and make it a GREAT day!

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