So, where are the good deals? I mean, it’s a buyers market right? So you’d think there would be ample opportunity to get a great deal on a foreclosure.
When buying a home, usually every buyer starts out wanting to look at foreclosures. As an agent of ten years, I’ve learned that is code for, “I really want a house that’s worth a lot…but I don’t want to pay market value…and I want it to be worth a lot more than what I paid.”
In Northern Virginia and Washington DC, these deals are still out there, but how you find them is a careful strategy. The problem with today’s foreclosures is that many of them are a result of the supercharged seller’s market of 2001-2005. Homes were being bid up, over their asking prices, and the next home that came on the market was listed at $10,000 or more higher than the last home that sold in the neighborhood…with no upgrades!
If the homes in the sellers market were overvalued, how do you determine if a foreclosure in today’s market is a ‘good deal’?
The answer…do your research, and use your due diligence!
First of all, if you’re going the foreclosure route, decide on an area. It’s exactly the same as if you were looking for a resale home on the market. Foreclosures come in all shapes, sizes, price ranges, and locations. Instead of trying to blanket the metro area, choose a zip code, school zone, or radius from metro. Anything that would give you an immediate edge if you had to sell the home quickly should be your first priority.
Second, take advantage of your Realtor’s tools to keep you informed of recent sales (a CMA or comparative market analysis), neighborhood sales alerts, or MLS market snapshot alerts. A market analysis is a snapshot of the homes that have sold recently, whereas the neighborhood sales ale rts tell you what homes are being listed for (and reduced to) in an effort to obtain top market value. The market snapshot alerts give you information (charts, graphs, and maps) of the market activity within a five-mile radius of a given address.
Be serious about your search. Get approved, so that once your foreclosure opportunity presents itself, you can submit a non-contingent offer. The foreclosure market itself is always a sellers market. You will be competing against deep pocketed investors, possibly government agencies, and other buyers who specifically want to buy a foreclosure. A clean offer will move to the top of the pile.
Don’t be afraid to low-ball a foreclosure. With the help of your agent, your research should give you a firm idea of the price range of the market value of the foreclosure at its highest and best use. Everything is negotiable, even the sales price of a foreclosure. Remember, foreclosures are in every market. They are also listed in the MLS and can present a great opportunity to build equity instantly.
Banks don’t want to be property managers, that’s why homeowners are given options and alternatives to avoid foreclosure. Banks really do want to ‘cut their losses’, and with the right information on your side, their loss can be your gain.
If you would like a list of foreclosures in your area (Northern Virginia & DC), please reply back to me and I’ll send you the information right away!