Is purchasing a house at the time of foreclosure similar to buying a house that has already been foreclosed upon?

No. There are two different types of home foreclosures purchases. The first is when the lender actually forecloses on the property. If you’re interested in purchase you can show up in court and bid on the home foreclosure. The second type is when the lender or insurer actually owns the property and is selling it as its rightful owner.

Is the escrow the same as a typical real estate transaction?

No. When you’re buying home foreclosures at the time the lender takes the property back, you must show up in court, bid on the property, and if the bid is accepted, you are obliged to buy the house with a cashiers’ check, without inspections, and without any contingencies. When you’re buying from a lender or insurer after the house is already foreclosed on, there is still the opportunity to negotiate the price and terms, but because of the competitive market, the lender will normally end up calling most of the shots.

Do home foreclosures involve any additional legal concerns or fees?

No. With proper inspection, home foreclosures are unlikely to be accompanied by any additional legal concerns or fees. Bearing that in mind, remember that usually home foreclosures are sold “as is,” and due to the fact that the lender has never occupied the actual house, they are often not aware of the intricacies that may typically be required on a disclosure (for example leaking roofs or problems with electricity).

Does buying a foreclosed house involve any risk?

No. Purchasing a foreclosed home is unlikely to be risky if you do a thorough investigation. Be aware of the two facts: lenders will have limited information to work with for disclosures; secondly, people tend to get excited by the idea of a “sale,” and fail to notice the actual value of house foreclosures because of a “perceived value” issue. Consider the following hint: try to forget that it’s a foreclosure and think of it as a piece of real estate.

Is a foreclosure always an “as is” deal or can I negotiate with the bank for repairs or improvements?

As a buyer you can always try to negotiate, but conditions of the home foreclosures market are more likely to favor the lender, who will in most cases be able to sell the property “as is.”

Purchasing a home involves many issues, such as legal, financial and emotional considerations. Therefore, it is a good idea to spend some time examining the mistakes of others, which should help you avoid disappointment or even finding yourself living in the wrong house. Below you can find some of the most frequent as well as potentially dangerous and cost-consuming mistakes that are made by first time home buyers.

• Running before walking. Once you’ve made the decision to buy a home it is easy to make that mistake. It involves rushing off looking at homes, surfing the web or calling on advertisements instead of making some careful preparations first. If you fail to prepare yourself properly, your purchase can end up in a disaster. I often receive emails from buyers who have signed a contract to buy a house and want to know how to avoid the purchase. Let each and every first time home buyer know it: if you contract to buy a home and simply change your mind, there is almost zero chance of being released from the contract.
• Over-buying the first time. Living a life of a “house poor” person is surely a very uncomfortable experience. Your house may be large and beautiful but with little or no furniture it will still be empty and cold. Situations when almost every penny you earn goes to the support of your house are a frequent cause of family stress. If you push yourself right up to, or possibly beyond, your financial limits will make you highly vulnerable when the changes to the national or your personal economy occur (and believe me, they will appear sooner or later). It is important that you leave yourself some room to breathe!
• Not comparing mortgages. When you decide to take a mortgage remember that there is a great number of variables involved: type of mortgage, term, lender and amount of points to mention a few of them. Therefore, it is essential to explore all of your options. You shouldn’t simply accept the first offer that is presented to you, whether it is from a mortgage broker, an agent or on the recommendation of a friend or relative. Be smart and devote some of your time to comparing. This will allow you to get the most advantageous plan for your requirements and financial situation.
• Recession. Every now and then the country suffers from economic slumps, which are impossible to avoid. The real estate market deploys defense mechanisms such as lowering home prices or providing various incentives such as lower mortgage rates or tax relieves to encourage economic activity. This may lead to a disaster or a deal of your lifetime. Remember, it is all about financial security. If you enjoy a good job stability recession is a good time for you to buy your first home at a very competitive price, without ever been exposed to the thread of foreclosure.

As a person with a lot of experience in insurance I suggest that if you’re a real estate owner you should check your coverage each year in order to find out whether you have enough insurance to rebuild your house and replace your belongings if everything is lost in a fire or other unexpected event. What you should ask yourself is:

• Is the “replacement cost” covered by your policy acceptable taking into consideration the costs of labor and materials in your area? For instance, it’s rather doubtful that many homes in Silicon Valley could be rebuilt for less than $200 a square foot.
• Does your policy involve “extended or modified replacement cost coverage?” This gives you a certain percentage above the policy limit to rebuild your house.
• Does your policy include a “building code endorsement”? It covers the costs of bringing your home up to building safety codes when it is being rebuilt.
• Getting reimbursed for a claim after a fire is easier when you have prepared an inventory of the objects present in your home. There is some free software available that can help to speed up the process.

For the majority of people, changing employers will have no impact on their ability to qualify for a mortgage loan. However, for some homebuyers the effects of changing jobs can be disastrous to their loan application.

Salaried Employees

• Salaried employees who don’t earn additional income from various commissions, bonuses, or over-time, switching employers should not have any problems. Just be sure to stay in the same line of work.  Hopefully, you will be earning a higher salary, which will improve your qualifications for a mortgage.

Commissioned Employees

• If a large amount of your income comes from commissions, it is unwise to change jobs before buying a home. This is associated with the way mortgage lenders evaluate your income. They estimate an average of your commissions over the last 2 years.

• Changing employers contributes to an uncertainty about your future earnings from commissions. No track record exists from which an average can be produced. Even if you are selling the same kind of product with virtually the same commission structure, the underwriter cannot be sure that past earnings will accurately reflect your future earnings.

Part-Time Employees

• If you earn an hourly income but rarely work 40 hours a week, you are not advised to change jobs. It would be impossible to tell how many hours you will work each week on the new job, so there would be no way to accurately evaluate your income. If you stick to the old job, the lender can just average your earnings.

Over-Time

• Because all employers award overtime hours differently, it is impossible to determine your overtime income if you change jobs. If you stay on your current job, your lender will give you credit for overtime income. They will establish your overtime earnings over the last 2 years and then calculate a monthly average.

A house can be a place where you eat, sleep, park your car, and keep all your “stuff” (including other family members). It is a material possession as well as an investment. A home is a place with a comfortable atmosphere, where you feel warm, safe, and protected.
A home is where you live. A house is something you buy logically. A home is typically an emotional purchase. When you buy a real estate you have to keep your emotional wants and your logical needs balanced, as there will surely be a time when the two conflict.

Example

For instance, you may dream about a house with a view, but the payment is higher than you can comfortably manage with on a 30-year fixed rate mortgage. What can you do?
Purchase the house anyway and plan your budget more thoroughly for the next couple of years? Buy the same house without the view for a lower price? Make a larger down payment by borrowing from your 401K or family members, so you get a lower payment? Get an adjustable rate mortgage with a smaller payment instead of a fixed rate loan? Or buy a smaller house and still get the view?
When buying the house, most people look emotionally and perceive it as a safe and comfortable home. Later, when making the offer or filling out a mortgage application, your logic may begin to kick in, instead.

Balancing Act

When buying a real estate you should consider all decisions from both a logical and an emotional point of view. In a situation when a trade-off is needed, decide on whether the conflict is huge or small. Logic should be in favor in the big conflicts, but emotion should always be taken into account.

An investigation has been carried out by a group of three economists in order to establish whether using a for sale by owner (FSBO) web site could really make homeowners more money in comparison to selling a house with a traditional real estate agent. The answer, at least in Madison, Wisconsin, is yes.
Long before the light of the Internet shone across the land, Realtors were the ones who had access to the lists of properties for sale in a given location. This information could be extremely difficult to gather on one’s own without flying to the desired city and driving the side streets, jotting down addresses. But along with the development of the Internet, it’s easy to list and share information, and even Realtors are opening up their listings to public access. In such a situation, does it still make sense to pay a 6% commission?
If you expect a low-stress selling experience, a Realtor is probably your choice. But if it’s all about the bottom line, it is being argued that selling a place yourself can be more profitable in a city with a well-used FSBO web site. Madison, WI has such a site (FSBOMadison.com) and provided to be an excellent test case for the already mentioned economist to compare FSBO results to Realtor results between 1998 and 2004.
To put it simply, their research indicates that the FSBO homes sold for an average price of $175,068 in Madison, while Realtor homes sold for $173,205 in the same period. When we remove commissions from that figure, the FSBO sellers came out a good deal ahead. However, using a Realtor’s multiple listing service (MLS) makes the time a house is on the market shorter and prevents you from having to witness strangers tramping through your home and pointing out the water stains on your woodwork.

You will often find yourself wondering how to add some value to your house, but it is usually associated with high expenses and lot of time devoted to renovation. Our hints will show you how to improve your house cheaply and with little effort. That a nifty touch here and a clever tweak there often add more value to your living space than the most extravagant additions or renovations.

1. The interior of your home may be perfect, but if the outside sucks, let’s face it, people are just going to drive by. Start the cosmetic makeover by cleaning up your yard; throw away all the old junk scattered around, trim the hedges, mow your lawn, and rake up all the leaves.
2. Paint the fence (or railing) that surrounds your home, and fix the broken boards and bars. The walls could do with a coat or two too.
3. Spruce up your front door with a fresh coat of paint, a new knocker, or possibly a shiny knob – such things work wonders. And make sure your doorbell isn’t broken!
4. Make sure the address number is in a readable, visible font. Stylized curves may not be those easiest on the eyes.
5. Paint your mailbox; or even pull it out and place a new one.
6. Recoat your driveway. Pull up growing weeds in the cracks between the tiles, and clean up the mold and mildew.
7. Uproot all the dead and dying plants and shrubs.
8. Add new vinyl and siding to replace those shoddy ones.
9. Don’t just shake out not the dust from the welcome mat, but put in a new, bright one that says more than just welcome.
10. Wash the windows – it’s hard to imagine how much of a difference one coat less of grime will make.
11. Clean the roof – you should hire a professional to do it.
12. Chop the tree branches that tempt entry through your house’s windows.

When you decide the time is right to sell your house, you usually interview a number Realtors from various companies to decide which of them is best for your needs. You’d want somebody who will be your representative as well as someone you think will do a good job at marketing your home.
However, when someone makes a decision to purchase a home, they often end up with their Realtor through sheer accident. Why don’t they do a home buyer search for a Realtor the same way that home sellers do?
Instead, homebuyers typically end up with a Realtor they picked up from an advertisement. The advert will provide a short summary of a home available for sale along with the price, but it doesn’t say a word about the Realtor.

So… does it really make a difference?

Bear in mind that there are two “parties” in every sale. The listing side and the selling side. Usually deals have an agent representing each of the sides, so there are normally two agents involved. The seller’s side is represented by the listing agent. The buyer’s side representative is the selling agent (also referred to as the buyer’s agent).
Agents can deal with both buyers and sellers, but the majority tend to focus their work on one or the other. Some can even exclusively handle only buyers or sellers.

So what should you do?

It is generally recommended that you hire a real estate agent with as much care as you would with any other kind of professional. Ask them questions about their education, experience, and focus. In the end, buying your future home is presumably the biggest and most important purchase you’ve ever made in your life. Does it seem more sensible to find your agent by accident…or by design?

Stable Monthly Housing Costs

When you rent a place to live, you can obviously expect your rent to slowly increase each year – or possibly more often. If you get a fixed rate mortgage when you purchase a house, you have the same monthly payment amount for 30 years. Even if you get an adjustable rate mortgage, your payment will remain within a certain range for the entire period of the mortgage – and interest rates aren’t as volatile now as they were in the late 70s and early 80s.
Consider how much rent may be 10, 15, or even 30 years from now? Which seems more reasonable?

Forced Savings

Some people just don’t have the talent to saving money, and a house can be seen as an automatic savings account. Your savings increase in two ways. Each month, a part of your payment goes toward the principal. Sure, in the early years of the mortgage, this is not much. However, over time it speeds up.
Secondly, your house appreciates. Average appreciation on a home is about 5%, though it will differ from year to year, and in some cases it may even depreciate. Over time, history has shown that owning a home is one of the very best financial investments.

Freedom & Individualism

When you rent, you are usually limited on what you can do to improve your home. You have to ask for permission to make certain types of improvements. It also doesn’t make sense to spend thousands of dollars painting, putting in carpet, tile or window coverings when the main person who takes the benefits is the landlord and not you. Because your landlord wants to keep his expenses as low as possible, he or she will normally not be spending much to improve the place, either.