Buying a Foreclosure Part 2

READY? What does "ready" really mean? Got your socks on? Shoes tied? That's ready to go outside. Done your homework? Backpack set? That's ready to go to school. Being ready to buy a bank owned home is more like steeling yourself for a series of events that are going to take place, no matter who you are and what you are offering.

Before we get to that though, you need a pre-approval letter from a lender well before you place your offer. In fact, you need your pre-approval letter before you go house hunting. You need your pre-approval letter even before you step in the FIRST house! Why go looking at something that you can't afford to buy? It doesn't make sense to use your time that way. Better to spend a few minutes on the phone with a lender, sorting out whether or not you can buy, and if you can, how much you can spend. Having that letter is the first and really most important step to "ready."

Wanna Tango? or Tales of Buying a Foreclosure Part 1

Considering buying a foreclosure to live in? Are you the type who can't wait to get your hands around that hammer? Or are you hoping to have someone else do the work for you? Either way, taking on a foreclosed property is not for the faint at heart. I'll post a series of steps/articles/blog posts about the process, and you'll be able to see if buying a foreclosure is something you want to tackle.

The basic idea is this: why should you pay full price for someone else's updates, when you can get a half decent house for a fraction of the cost? Good question. Just go in to the process knowing that it's not for the faint at heart. The hardest part of buying a foreclosure, believe it or not, might be finding the right one.

Properties that have languished on the market for a long time often have major defects that would be cost prohibitive to repair. On the other hand, some properties with longer market times are simply not good investments for people trying to make money, but would be fine to live in. So step one, finding the house. It's going to take seeing a lot of dogs to find a place you actually want to live in. The houses are cold, very cold, and most often pretty dirty. They are dark because usually electricity is turned off, and the water is off, so the toilets and sinks look gross. Be prepared to do your leg work, and really hunt for a house that you want.

When you find the one you want, be ready! You will have to place your offer nearly immediately. I can tell you many tales (one that happened two weeks ago) of showing a client a house on a Wednesday, writing the offer Thursday night, and by Friday morning when I checked with the listing agent, the house had already been sold. Stay tuned for part two, "Being Ready."

Happy Birthday Abie Baby

Happy Abe Lincoln's birthday. Take a minute to reflect on the man who changed the world in many ways. One direct way that influences our industry is the beginning of fair housing laws. Remember that in buying a home, you may live absolutely anywhere you choose (with a small caveat about senior housing). And very importantly, remember that as a seller, you must sell your house to anyone who can afford to buy it. None of the, "what type of people are these" comments. Go forth and sell!

Live from University Heights

It's hard not to get trapped in your own little world. In this niche market, a starter home is in the $150-170,000 range, and has 3 bedrooms, 1.5 baths. Moving up will cost you in the $200-250,000 range, and then there's going way up, which you can definitely do in Beachwood. Today though, I was contacted by an investor who is looking at places that cost $1500. Yes, you read that number right. As long as you're willing to live in East Cleveland, you can buy a house for not much more than a cash advance on your credit card. At 1621 Pontiac, you can get your feet wet in the real estate marke-- you're near a hospital (Huron Hospital), you're near a park (Forrest Hills), you're steps from the train tracks, and oddly enough, you're really only a mile or so from the tony suburb of Bratenahl. Wierd.

Let's Look in South Euclid

Off to look at houses in South Euclid today. It's one of our most overlooked suburbs. Great little city, low taxes, decent schools (http://www.sel.k12.oh.us/) and what's more, AMAZING house prices. Here is a cute house up on Anderson Rd., available for around $50,000. (Too bad, but it's NOT the one in the picture to the left). Lots of great stuff available.

Snowy Day in Cleveland

We woke up to (more) snow in Cleveland. Not to worry, word on the street is that it will let up some time today.

On the housing front, two foreclosures in the Green Rd. area last week were snapped up by savvy buyers. One was listed at $84,000, and the other at $52,000. Buyers wondered about the difference. Both were three bedroom, 1.5 ba houses. Both had detached garages, both small back yards. Both were decent in side. The higher priced one (Milton Rd.) was cleaner, nicer, has a large and nice family room with built-ins, the other (Baintree) had a small, somewhat junkier family room, but also had a walk-up third floor (unfinished as of yet). The main difference is that the asset manager at the respective banks chose different prices! Each time the bank holds a property, they get three price opinions (the BPO or Broker Price Opinion) and then they price from there. Baintree has traditionally sold for less than Milton, and in this case, that remains true. It's been a slow but steady trend in our neighborhood to see 1 foreclosure at a time. This is the first time we've seen two at once. I just hope they go back on the market promptly and get sold at decent prices.

As far as the actual houses go, it will be interesting to see what the re-habbers do with them. Top notch jobs with granite? Somewhat cheesy jobs with el-cheapo carpeting? Wait and see. Better houses are definitely still moving.