Experts: Great Time for Shopping on Bank Foreclosure List

by Peter Vernon on Foreclosure Rates

Many industry experts agree that the market is ripe for homebuyers and investors who want to buy properties on bank foreclosure list. First time homebuyers or investors are taking advantage of the low housing prices, reduced interest rates and tax incentives, according to experts.

The current housing market is heavily laden with short sales and foreclosures that help drive down prices. About two-thirds of houses for sale are owned by lenders while short sales and foreclosures accounted for majority of properties on bank foreclosure list. Short sales are properties that are priced less than the total mortgage that homeowners owe to their lenders.

According to industry experts, the great number of foreclosure properties and short sales on bank foreclosure list creates an unpredictable climate for homebuyers.

They suggest that potential homebuyers should be prepared to make a closing when a buying a property by arranging their finances first before making an offer. In the current market, the success of buying short sales and foreclosure houses is contingent on the buyer’s ability to close a deal immediately.

Industry experts observed that potential buyers who have cash and a combination of patience and aggressiveness are the ones who get to have the best deals. They said that banks may require potential buyers to submit a loan application and they may offer reduced closing sale costs if buyers get mortgage loans through them.

Meanwhile, experts warn potential buyers about the intense competition for deeply discounted short sale and lender-owned properties. Earnest money, or the sum potential buyers pay to show their eagerness and sincerity in pursuing the deal, will give buyers leverage on the deal.

However, in the case of properties owned by banks, earnest money are usually non-refundable, meaning buyers could not recover their down payment if they back out of the deal.

On the other hand, prospective homebuyers may find financial help with the U.S. Federal Housing Administration’s (FHA) 203k loan program. The mortgage loan program includes funds for home refurbishment.

First-time homebuyers find the 3.5 percent initial payment and loan cap of $346,250 quite a bit appealing. But the loan amount requires the inclusion of repair costs and the property needs to be appraised for the total amount.

Real estate expert R.L. Brown agrees that now is the right time to buy properties on bank foreclosure list because even if housing prices decline, low interest rates indicate a return on investments.