5 Misconceptions About Foreclosures/REO

More and more home buyers these days are interested in buying foreclosure/REO properties . But many home buyers don't know or aren't correctly informed about what goes along with buying a foreclosure/REO property. Below are some of the most common misconceptions about foreclosures/REO. Let's see why they're false and what the truth really is:

1. "Not everyone can look at foreclosures." - False. Any qualified prospective buyer or investor can preview a foreclosure the same way they can preview any other home with a lockbox on it. Simply contact your Buyer's Agent or the Listing Agent listing the property to arrange a time to preview the property.
2. "Foreclosures are all great deals." - False. Not all foreclosures are great deals. In fact, most foreclosures on the market right now are not great deals. You have to crunch the numbers on each and every foreclosure on a case-by-case basis though the general rule of thumb is that you'll need to spend between 10 and 20 percent of the purchase price on renovations just to get the property into move-in condition. Though this is the general rule of thumb, it could be much less or, even worse, much more. (If you have a Buyer's Agent, they should be running the comps and helping you crunch the numbers as part of their duties to you)
3. "I can get the property inspected prior to settlement." - False. Foreclosures are sold "as is" meaning that no Home Inspection or inspection of any kind is honored. You basically go in blind. Even if you were to find something wrong with the property, the bank will not fix anything. What you see is what you get.
4. "I can get a response back from the bank in the same time it takes any other seller to respond." - False. Banks can take up to 60 days to get a response back once they've received an offer. Yes, you read that correctly. If you are in a hurry to move, a foreclosure is probably not the best way to go.
5. "It says that I have to be approved through their specific lender so I have to use their lender for my loan." - False. The bank who owns the foreclosure wants to make sure that you're approved to purchase the property and wants a chance to get your business so they require you to get approved through them. But you are not obligated to go through them for the loan. You can use whichever lender you wish.

Here's the bottom line - make sure you know what you're getting yourself into and that you analyze each property carefully. Remember, only a small percentage of foreclosures are truly a good deal. That's what Loudoun Foreclosures is here to help you with - sifting through the "noise" to find the best deals available.

Should you have questions about any of the 5 items above or anything else, feel free to contact us for further explanantion or guidance. We'd be glad to help.