Are Foreclosure Properties Cheaper? | Real Estate Remarks - YouTube

Hi there. My name is Taylor

this is HACK&Company at RE/MAX River City

and let's talk about foreclosures

because the question is are foreclosure properties cheaper.

Well, I'm going to put it in perspective

for you because there's a few things you should know about foreclosure properties.

One, the objection, the objective of the system is to make sure that these properties are

sold for fair market value,

or above, doesn't make a lot of sense.

But I'm going to break it down for you. When someone goes into foreclosure,

what it means, is that they were unable to meet their obligation with

their mortgage agreement to make those payments

and foreclosure can

technically start like the day after you miss a payment.

Some banks right now are talking to

people that are in foreclosure

and making arrangements for them,

and we're not seeing a huge influx of foreclosures into the market at the date

this video is being released, however,

when someone's approaching a foreclosure, we feel

as though they could use a lot of coaching because this is so different than a regular process

of purchasing a property.

I'm going to break it down a little bit so you can see the inside.

First off, when you make an offer to a regular property listed by someone who lives in it,

in many cases, you're probably going to get a response the same day whereas in foreclosures,

it's going to take a couple of weeks to get a response in many cases.

Now, also the offers with the regular properties and foreclosures tend to be different.

This is just kind of a little bit like not guaranteed meaning that there could

be somebody out there that offers full representation

and warranties on foreclosures,

I just don't see it. Meaning that

when a large entity like a bank or an insurance company goes and forecloses on a property,

what they don't know is a lot to do with the history of that place.

So saying that the permits are up to date

and all the other obligations that would be part of a regular sellers experience.

Those are covered off by what we know is a schedule A. Now, a schedule A is a part of a contract that can be

part of many different contracts.

But it's one thing that we all know to expect,

when we're making an offer on a foreclosure,

meaning that the seller is not going to provide the regular representations

and warranties related to things,

like a real property report or obligating themselves to Municipal compliance or also,

making sure that there's no material latent defects to the property.

So somebody who is a good fit to approach

a foreclosure should be someone who has a construction background

or a large budget and is expecting some problems that they can't see.

Now when it comes to Home Inspections,

that's where you would normally get to see a lot of this information.

And that would be present on most properties,

but not necessarily on most foreclosures.

And what that means is that the entities that are foreclosing on,

are working through a lawyer that's working through guidelines.

And if you had a home inspection clause in your agreement to purchase that place,

they would have to be able to review that meaning that they would all have to book time in court

possibly, and that would mean a huge expense for someone to say,

Hey listen, can you fix the dishwasher

so that situation is something that is done in a different process in foreclosures.

There are ways to take a detailed look at what you're going to get,

but it's a little bit different than the regular process where you're

able to tie the property up, have a home inspection

and then remove conditions.

The other thing that you should realize, is that a lot of these properties,

well, all real estate is kind of valued on its characteristics location and condition.

Foreclosure properties tend to be a low condition and the reason for that is being in the past

I've worked for a major Bank.

What is known there is that people will tend to stop paying their bills in a specific

order from the things that they need less like maxed out credit cards to the things

that they need more like car payments.

And finally, the last thing they tend to miss on,

is their mortgage payment.

And that means that this family

or the person owning this property could be in the struggle for a long time

financially, meaning that the property isn't getting regular maintenance

like it would with someone who was living comfortably.

So in that case you should definitely be getting a better deal on a

foreclosure meaning that you're not getting representations

and warranties and if you're able to overcome that you're part of a smaller pool,

so there's less demand for properties like this.

The second is that since you're taking more risk,

you should get more reward. So since there aren't these representations,

and warranties there aren't ways to necessarily get home inspections,

and sometimes they won't even allow financing conditions, you are in a smaller group

and you'll notice that these smaller groups has parameters to buy these properties at a lower price.

However that's not always the case. Keep in mind that these offers are reviewed first by a lawyer

and then in court to make sure that the market is sold

for fair market value or the most a Market would pay at that time,

because if the amount owing on the property is less than the amount

or is less than the amount that the property is sold for including disbursement costs and so on

the amount remaining is actually given back to the person being foreclosed on.

That's very different in places like Alberta Canada,

as opposed to different places that we see on television throughout the United States,

that have much less consumer controls.

That's where you see seven hundred thousand dollar properties

sell for, like a nickel in a song. My name is Taylor.

This is HACK&Copmpany at RE/MAX River City, and the question is,

are foreclosure properties cheaper?

And the answer is first, you need to know Market value,

and then you need to get a deal on these properties to make sense

in most cases. Hope you're doing awesome.

Cheers.