Foreclosures are a great opportunity to get a home at a bargain price in Southern Maryland. Home buyers need to be wary, however, because there are several easy to miss pitfalls and risks associated with buying a foreclosure.
1. Condition Dictates Value
This means that the condition of the home will affect what the home actually sells for. If the house is in shoddy shape, the final sales price will affect that. Look at comps when you go to place an offer and adjust your offering price accordingly.
2. Banks Aren't Giving Houses Away
If it looks to good to be true, it probably is. When you find a listing for home priced significantly below the surrounding market or neighborhood, there is always a reason as to why. The concept of buying a livable home in Charles County or Southern Maryland for less that $10,000 is simply not true. You can find some excellent bargains, but don't expect to pay $200k for a home that is actually worth $600k.
3. Home Inspections are Critical
Think about it like this: The foreclosure process in Maryland can take a year or more. That's a full year where the homeowner has been unable to pay the mortgage. If you are behind on payments and know that foreclosure is eminent, ZERO incentive to pay for upkeep and maintenance on the property. After the foreclosure, the property then sits vacant and can develop issues related to it's abandonment. Always hire an inspector to go over the property with a critical eye.
4. Great Deals Don't Last Long
You're not the only person out shopping for a home, and if a value priced property hits the market, you can bet there are lots of appointments be made to see it. Make sure that your financing is in order before you start looking. The last thing you want is to find the perfect house and then lose out to someone else who was able to get their offer in first.
5. Bank Owned (REO) Properties Are Sometimes "Under Listed"
This stinks, but banks have been known to list properties way below market value on purpose. They may list a home for $200k, Knowing it's worth $275k, just to get a bidding war started between multiple offers. They see it as a way to get the highest price possible, I see it as intentionally deceptive. Agents occasionally refer to homes like this as "Liar Listings".
How Do You Protect Yourself?
Get a buyers agent to represent you. The listing agent on a foreclosure works for the bank, not you, and their job is to get the property sold while protecting their clients bottom line. A buyers agent works at no cost to you, and their job is to help you make informed decisions and craft an offer that will save you the most money possible.
Speak to your buyers agent about the best way to prepare yourself for buying a foreclosure. They will be able to help you get in touch with a loan officer, ensure the property you buy will conform to your loan guidelines, and help you hire a home inspector who knows what to look for in foreclosures, among other things.
With the right people on your side,buying a foreclosure is as easy as buying any other home, and the value and savings can be tremendous!
LINK: Foreclosure List for Charles County, MD as of 5/20/2009 Need an Updated List?
Questions about buying a Foreclosure? Give me a call!
~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000 - office
301-653-8116 - cell
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