Fortunately for Willow Glen neighbors, there are actually 7 bank owned properties in the neighborhood. That is good news. In Alum Rock there are 129 homes that are bank owned. Fewer foreclosures equals better neighborhood home values.
Recently, the banks have become “motivated sellers”. Over and over I see banks listing the price about 5% under market value. Imagine how this effects other homes in the neighborhood that are priced at market level? With these below market prices, buyer’s jump into the process believing that they have a great chance for a good deal. Maybe. Why? Because several other bargain hunting buyers are also in line with an offer. Typical scenario; the house is listed as bank owned, the price looks incredible, and my buyer ask me to set up a time to see the house.
Then I call the listing agent. I consider it a great day if I actually get a chance to talk to the agent. Most of the time the multiple listing service notes indicate a “DON’T CALL. EMAIL QUESTIONS.” message. So, I email them and when they respond, I am told there are 5 offers on the table.
But my buyer is really interested, so I get the email with the instructions on how to make an offer. Many times that includes more than a simple pre-approval letter. Lately, I have found the owner (bank) wants to pre-approve the buyer and in fact some require that their underwriter of choice complete the loan.
Once all the paper work is received, the offer is made; I get a call back from the agent. The agent tells me, “The bank would like to see the buyer’s best and final offer.” Then my client makes a decision on whether or not the house is worth any more than they have offered and we move on to the next step.
My point with this example is not to say “Don’t buy foreclosures”. But, many new clients call me with the expectation that these purchases are like purchases with private sellers and they are not. It takes a fairly savvy buyer and an experienced agent to come out on the other end with a great deal on a foreclosed home. Because these homes are sold AS IS, it is important that buyers know that any inspections completed are on their dime. Having a price below market does not necessarily mean the value of the home is above market. Studying the comparables to the property and understanding the neighborhood trends and values will be essential to understanding the real value.
Some tips on buying foreclosures:
1.) It is best to choose an agent that knows that neighborhood and is willing to spend time reviewing the historical and current trends for the area. Don’t work with an agent that you don’t trust completely. It simply isn’t worth it.
2.) Look around at homes in the neighborhood and compare. Talk to neighbors to get as much history about the home as you can.
3.) Make sure you review the preliminary title report closely to know what if any other liens are against the property. IRS liens can be difficult to deal with on title. Make sure you do not skimp on title insurance.
4.) Invest in inspections. A property inspection ($250-$500), termite inspection ($150-$300), roof ($100-$150), and chimney ($85-$150) are the basics. If there are any suspicions regarding the foundation, a foundation inspection can cost approximately $500-$1500 depending on the home and location.
5.) If there are repairs to complete, talk with professionals and get the best estimates. Calculate this into the “deal”.
6.) Have your loan information neatly and completely compiled and in a format that is easily transferred. Extra copies or even better, email-able PDF files. Be prepared to close quickly.
7.) Control your emotions about “getting” the home and the deal. The more rational you can approach the process, the less likely you will be disappointed. Save the “hootin-and-a-hollerin” until you have the keys, open the door and it is vacant. Yes, vacant. Sometimes you get the keys to find the owner hasn’t left yet and now an eviction process is necessary.
8.) Patience is definitely a virtuous trait to possess while working on a deal involving a foreclosure. Remember, you are on bank time now.
9.) Know your bottom line. Know how high you will go. Know what the home is worth to you today and 6 months from now.
10.) Be ready to jump! If it is a deal, it won’t sit on the market long. If you want to get a deal, be ready to make the decision, place an offer and play the game. Time and time again, I have seen opportunities disappear because of indecision. Yes, of course there will be others but it is better to know what you want and get it now.
Here is a list of the current bank owned properties in Willow Glen. If you would like more information on these properties, or other bank owned listings, contact me. I am glad to help you sort out the foreclosure market.
1443 HERVEY LN – Price $652,900- Days on market 131
1471 RICHARDS AV – Price $628,900 – Days on market 31
2420 RINCONADA DR – Price $574,900 – Days on market 20
1044 MERIDIAN AV – Price $569,000 – Days on market 6
2361 PLATEAU DR – Price $559,900 – Days on market 5
864 IRONWOOD DR – Price $549,900 – Days on market 230
2120 RADIO AV – Price $449,900 – Days on market 8