Profile picture for BIRDOGX2

What about paying cash for a home?

do you recommend paying cash? and what should I know about buying a foreclosure
property?
  • June 20 2014 - US
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Answers (3)

34% Americans buy properties with cash. Hassle free, no mortgage. 
For bank owned you need to do carefully during inspection determine what the total cost will be. No credit back for repairs, code violation. 
 
Condition is everything.  
 
  • June 20 2014
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Hello B,

If you're pursuing purchasing a foreclosed property, there is a lot you should know if you have never done it before. There are different stages of foreclosure and the more you know, the more you can protect yourself.
Pre-foreclosure is when the homeowner still owns the property and knows there is potential for foreclosure. They're likely not current on their payments and are in danger of destroying their credit and losing any equity they have. Buying at this stage is tough – the sellers may be on a deadline and things have to happen quickly. The sellers will be extremely motivated and may work out a short sale if the bank allows and they can find a buyer fast enough.
The second option is to buy at auction. This should be approached with caution – there is a lot of risk such as liens on the title and unknown repairs. Also, cash is typically required on hand at this stage if you beat the bank's bid and win the auction.
The last chance to get these great deals is post-foreclosure. At this point, the home is known as REO – real estate owned property by a bank or lender. The bank won at the auction and is now selling the home to recoup as much money as possible – at least what is owed on the property. The bank will likely hire a local real estate agent to put it on the market. The longer the home is on the market, the more willing the bank is to work with you on selling price. Keep in mind, banks do not enjoy the business of owning real estate - they want to get rid of it as quickly as possible at a price close to market value.
A few things to keep in mind when purchasing a foreclosed property:
You are buying the home "as is"- The owner/bank may not do any type of repairs and you may have to waive all contingencies. 
(If you are paying cash this will not apply to you) - Get a full approval from a mortgage lender who has verified your income and assets. This will give you more negotiating power. 
Pick a zip code you are interested in and do research on what homes are selling for and the recent trends with property values in that area. 
Determine potential repairs and their costs if you are able to do a home inspection.
 
To find foreclosures, you'll want to work with an experienced real estate agent who has access to local multiple listing services and can pinpoint the potential deals for you. Be cautious and patient in the process of buying a foreclosure. If done right, you will find a great home in which you may have some instant equity.
Much Success,
 
Von
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  • June 20 2014
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Profile picture for wetdawgs
Here's a  link to Zillow's foreclosure information.  

Buying a foreclosure with cash is easier than with a loan.    On the regular market, cash may beat an offer with a financing contingency but doesn't get a discount.
  • June 20 2014
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