Money & Company Tracking the market and economic trends that shape your finances. Real Estate | Autos | Consumer | Economy On the market: Buying foreclosed property February 20, 2010 | 8:13 am The biggest mistake most people make when purchasing a foreclosure is getting in over their heads financially, says Leo Nordine, owner of Nordine Realtors in Hermosa Beach. “If you can’t afford to get a 30-year fixed, you can’t afford the house. I cannot tell you how many houses I have sold more than once because the buyer didn’t do their homework and ended up losing the home to foreclosure two years down the road,” said Nordine, who has specialized in foreclosure property since 1990. Thinking about buying a foreclosed property? Here are five tips from Nordine:
Know the market. Subscribe to ForeclosureRadar. The map-based system allows subscribers to track foreclosures throughout California and the West Coast with 60 criteria (lender, value and map, for example). The site has a foreclosure learning center and offers a three-day trial (free) or a monthly subscription ($49.95). “You can target properties and look up the sale date and other information,” Nordine says. “You can know about the property details before the listing agent.” Buy smart. “The cheap stuff is bottoming out. The high end is still going down. So Lancaster is a good place to buy right now because it’s at the bottom. Brentwood, in my opinion, is still going to drop,” he adds. Nordine says South L.A., Riverside, North Long Beach and East L.A. are good bets for foreclosure bargains. “Those are places that are relatively safe for investments, because you are not going to buy and watch the price drop 10% six months later,” he says. Be prepared to beat the pack. Good foreclosures garner multiple offers, so write a clean “as-is” offer that allows for the seller’s “choice of title” and “choice of escrow.” Sellers are drawn to offers that require less work for them, Nordine says. So be ready to jump through all the hoops. “If the property is owned by Chase, and Chase requires pre-qualification by a Chase loan rep, for example, get the pre-qualification right away. If they want proof of funds or a credit report, have that documentation ready to go,” he says. Leave emotions at the door. “It is a tough market with a lot of people looking for deals, so it’s easy to get discouraged, Nordine says. “But if you’re diligent and keep trying, you will eventually find a good foreclosure.” Get the big picture. With fewer disclosure requirements on most foreclosures, Nordine says it’s important to do your due diligence on the history of the house and get information about the property, past and present. Keep an eye out for outstanding liens, loans, fees and tax debts that could transfer and become your own personal post-sale headache.
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