If you have been looking to purchase a new home or have just been keeping tabs on the market, you may have realized the large number of foreclosures on the market. The St. Louis Real Estate Market has been flooded with foreclosures over the last few years and even more are expected to come onto the market once banks streamline their process for unloading these properties.
What Are Foreclosures:
Foreclosures are properties that have been repossessed by banks. To understand how this happens, we need to start with the mortgage. Most homeowners take one of these out to purchase a home. Mortgages are basically loans that list the house as the security of the loan. If a homeowner stops paying the monthly mortgage, the bank or whoever else owns the mortgage at that point will start the process of legally acquiring the property. The thing is, the these companies don’t really want the property, they want their money. Most of them are not in the business of owning and selling real estate. That is why they often sell the properties for less money than they are worth (basically at a loss to them as compared to the mortgage amount) which passes on an often tremendous savings to whoever buys one of these properties.
Foreclosures: Great Opportunity
Buying a foreclosure could be a great opportunity for a potentially great home at an even better price. It could also be a lucrative investment as a rental property or eventual sale once the market rebounds. I recommend searching for foreclosures in areas where the area is not already flooded with the same. Any neighborhood saturated with foreclosures may be headed for further price falls.
It is imperative that you have financing in place before you begin your search. When a good foreclosure hits the market at a great price, there will probably be quite a few offers for the property. I have worked with more than one client who has lost a property to another buyer because they were busy working on getting financing after they found their ideal foreclosure while someone else cemented an offer. If financing is needed, I recommend getting pre-qualified or, even better, pre-approved for a loan before searching for any property so that you know exactly what you can afford, or how much someone is willing to loan you. If, however, you are looking to purchase a foreclosure as an all-cash deal, make sure your assets are liquid enough to transfer as a cashier’s check to a title company if a contract is accepted.
Foreclosures: Big Mistake
Don’t make the mistake of underestimating repair costs. If you are seriously interested in purchasing a foreclosure, take the time to have the property inspected by a professional(s). A good deal is going to require a little to a lot of work so make sure you estimate the costs accurately.
If you are a novice at foreclosure, stick to buying a REO (Real Estate Owned). These are properties already owned by a bank. One alternative, which many experts in real estate use, is the real estate auction whereby you bid on properties on the courthouse steps. Another alternative is the short sale and I can tell you that short sales are never short. They can take months of waiting and can fall through at any moment. REOs generally offer the lowest prices of any distressed properties.
If you decide to start looking for a foreclosure, make sure you work with an experienced agent with a few foreclosures already under his belt. An inexperienced agent could turn an easy transaction into something for more complicated very quickly. He or she may just lose a small commission, you however, will lose out on a great deal. Also, make sure the agent you do decide to work does his homework on the area surrounding the foreclosure. What a foreclosure may go for in one part of town may go for something completely different on the other side. Ask your agent for a market analysis of similar comparables to the desired foreclosure in that area.
Search for St. Louis Foreclosures: If you are interested in searching for foreclosures as a new home or as am investment property, I can set you up an instant search through the St. Louis Real Estate Agent’s MLS system. This will not only allow you access to view information on foreclosures already on the market, but will also update you anytime a new foreclosure comes onto the market.
St. Louis Real Estate Agent