Wednesday, December 30, 2009

Tips for Buying Foreclosures in the Charlotte Area

Many Charlotte area residents are considering foreclosed properties either as first-time home-buyers, or as investors. The number of available foreclosed homes is incredibly high--at 1.5 million right now, and more are expected to be available soon. This means great opportunities for bargain hunters, and plenty of possible pitfalls for home buyers as well!

Here are 7 tips for making sure you get a foreclosure that is right for you.

1. Don't get caught up in the "foreclosure frenzy"

Everyone loves a great deal and the idea of getting a home for a bargain, or even for less than it is worth can make people pretty excited--but that doesn't mean you should forget your common sense! Banks put repossessed homes back on the market at below-market prices because quick sales help avoid the expenses of keeping the home up, the property taxes, the insurance, heat and electricity. They need to get these houses off their books (and onto yours!) so they are willing to make a deal.

Those hard-to-believe prices may be golden opportunities, but they may also attract a frenzy of buyers who may bid the homes up until they are no longer bargains. Don't get caught up in a bidding war, and find yourself spending more than you can--or should for a property. Carefully consider what you want to spend, and when the home reaches that point in the bidding process, move on.

2. Contact lenders directly

Buyers looking for an edge, should establish relationships with asset managers at banks. The asset managers may know when new foreclosures hit the market, and can give you a competitive advantage. In the case of a short sale, you should talk directly to the property's asset manager. That way, if the short sale falls through and the bank repossesses the house, the asset manager knows you are still interested, and you could be in a situation where you get the advantage of a quick sale without other bidders.

3. Get pre-approved from "their" bank

If you're trying to buy a property from a certain bank, take the extra step to get a pre-approved mortgage from them. Lenders may be more inclined to accept your bid if they know they are also getting your business in the deal. (And you can always change lenders laters)

4. Consider fixer-uppers

Most bank owned properties, are "sold as is", and many foreclosed homes are in less-than-perfect condition. Since the former owners were often struggling to pay their bills before the foreclosure, they may have neglected routine maintenance, or even the big stuff"--or they chose to trash the property before vacating, removed the majot appliances, fixtures, wiring and other important pieces of a home.

While some lenders will make some repairs before the sale closes, many would rather sell the house to the next available bidder, so be willing to consider a home that needs some work, and just budget the repairs into your overall investment numbers.

5. Work with a real estate attorney

Once the bank agree to the sale, they will often want to move fast--and the real estate contracts are full of legalese that can be hard to understand. Choosing to work with a real estate attorney is a great solution, even in states where they are not required. A real estate attorney can assist you in making sure the contract is equitable and the property you are buying really is a deal!

6. Wait to make an offer

It may work in your favor to wait before making an offer on a property you really like. Let the house sit on the market a few days, and then talk to the agent--they may give you some kind of clue as to what a good number is compared to bids that have already come in--especially on a home that has LOTS of interest (but don't wait TOO long--a day or two will usually be plenty in a hot market).

7. Have an inspector and/or contractor look at the property

It is true with any home--but especially so with foreclosed pays to have a professional look at the "structure" and potential problem areas of the home before you make an offer. A professional home inspector and/or a contractor will be able to tell you about foundation cracks, heating and cooling systems, roofing issues and other needed repairs, and what it will cost to make the repairs, and get the home in working condition. A contractor may also be able to tell you what "could" be done in the future to make that home more livable, such as a patio or sunroom, or other additions.

Would you like more information about the Mint Hill, Matthews and Charlotte area real estate market? Check out

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