Foreclosed Homes Can Be Good Deals, Bargains for Buyers

By LaTina Emerson

RISMEDIA, January 20, 2009-(MCT)-Buying a foreclosure property was Amanda Rasch’s only hope of owning her own home. After fleeing New Orleans to escape Hurricane Katrina in 2005, Rasch, her husband and two children lived with her parents in a small Augusta house purchased with her parents’ Federal Emergency Management Agency evacuee housing vouchers.

Money was tight, but they were able to start looking for a home in late 2007.

In April, they bought a four-bedroom house in Martinez for $111,000. It had been valued at $135,000. Real estate agents say similar deals are available on foreclosure property throughout the Augusta area.

The Rasch family bought their home through Century 21 agent Jeff Keller III. Mr. Keller said homes that are available because a bank foreclosed on a previous owner sell for a “wholesale price.”

Buyers can find foreclosure properties up to 40% off their market value, he explained.

He tells clients who prefer not to buy foreclosures that they’re “probably cutting out easily 50% of the marketplace in Richmond County, as opposed to North Augusta, Columbia, McDuffie or Jefferson.”

The process for buying a foreclosure property through a real estate agent is the same as a normal purchase. Buyers must verify their income, have good credit and be able to show they can make their mortgage payments, said Bob Hale, the owner of Bob Hale Realty on Deans Bridge Road.

Short Sales or pre-foreclosures, allow potential buyers to bargain with the mortgage company.

“Mortgage companies do short sales when they don’t want to keep them on their books,” said Augusta broker Ira Tindall, the owner of RE/MAX Masters on Washington Road.

Usually, the mortgage holder is willing to take a lower price for the home. For instance, it might sell a $200,000 home for $180,000 simply to get rid of it, Mr. Tindall said.

Short sales can be initiated from foreclosure notices printed in the newspaper, though that is rare, he said.

Also, if homeowners think they might lose their home, they could contact their mortgage company, which would then contact a realty agent about selling the property as a short sale.

If a buyer is interested, the mortgage company can begin the sale of the home.

Because the company does not yet have the title, though, the current homeowner must become involved in the process, Tindall said. He said that some homeowners might refuse to participate because they are embarrassed about losing their home but that the process is a win-win situation for everyone.

“The owner doesn’t have a foreclosed piece of property on their record, the mortgage company gets what they want and the buyer usually gets a better buy,” he explained.

Buyers of homes at auctions on the courthouse steps purchase a house as-is. They might have seen the outside of the house, but they won’t have any idea what’s on the inside, Hale said.

“All foreclosure properties are not a good deal. Everything that looks rosy isn’t a rose,” he said.

Home buyers should rely on professionals, such as real estate agents and home inspectors, to make informed purchases, said Keri Mason Roth, a partner at Atlanta-based law firm Morris Hardwick Schneider. These professionals can provide information on the neighborhood, tax history, and details about the property, such as lot size, footage or homeowners association dues.

Foreclosure notices must be printed in the newspaper for four weeks before they are taken to the courthouse steps, Tindall said.

These proceedings take place on the first Tuesday of the month in Richmond and Columbia counties, he added.

In Aiken County, they are held the first Monday of each month inside the courthouse, rather than on the courthouse steps. If that day is a holiday, the auction is held on Tuesday, according to the county’s website.

Anyone can bid on foreclosure property, but buyers must pay in full with cash or a certified check after the sale.

“It usually takes you two or three weeks to get the title. If people are still in the house, you will have to go through eviction procedures,” he explained.

There might also be back taxes due or liens on the property, Roth said.

Also, it’s not as easy to find a bargain at the courthouse steps, Mr. Hale said. Lenders are present, and they’re seeking the amount owed on the property. Buyers can find better deals, as well as security, through a real estate agent, he added.

Property auctions are another way to find foreclosure properties, though it will likely take more time to close the transaction.

It’s worth it, however, because the auctions provide huge savings without financial surprises, such as back taxes, Roth said.

Buyers should still visit the property in advance to know what they’re bidding on, she said.

Banks or Mortgage companies might decide not to auction homes in their possession, which are referred to as real estate owned property, or REOs.

Instead, they ask real estate companies to list the properties in the multiple-listing service, as though they were normal vacant homes.

Houses that don’t sell on the courthouse steps are also added to this database, making the property available to all licensed real estate agents in the area, Tindall said.

In addition, deals are available with financing, Rasch said. Through an offer with the U.S. Department of Housing of Urban Development, her family was able to put only $100 down and use the down payment money to reduce the interest rate. The deal was available because the home was a foreclosure property, she said.

Rasch said they found their home at a good time; she has a toddler.

“Without this, we’d still be cramped in with my parents,” she said.