Foreclosed homes are all over news right now. Everywhere you turn someone is talking about all the foreclosures in the country and how they are effecting the economy. You have seen many infomercials trying to sell you the secret to buying foreclosed homes for pennies on the dollar and turning them into money making machines, but it is not as easy as it sounds.

Topeka is not flooded with foreclosed properties, and as we discussed before, the real estate market in Topeka just hasn’t taken the dive many other cities have over the past year.

In today’s market the banks are working hard to recoup as much of their loss as possible. They are not pricing their homes at pennies on the dollar and typically have multiple opinions from professional REALTORS® to determine the value of the properties they own. Most foreclosure properties are valued at or close to fair market value. There are some great buys out there and you can save money buying a foreclosed home, but make sure you really are saving money before you sign on the dotted line!

If you do find a foreclosed property that you are interested in and are ready to have your agent put in an offer, keep in mind that the bank doesn’t think like a normal seller. They have no emotional involvement in the transaction, this home is just a loan number in the computer system to them. They do not have to sell and will usually bend on their price a bit, but if the dollars net to them from an offer doesn’t fit in their guidelines, they simply reject it. They also will not make any repairs and prefer that you don’t even have inspections at all. They will let you have them, but still expect you to buy the home AS-IS. This is typically a problem if you are using an FHA loan to purchase your home because of the FHA guidelines and standards a home must meet and be corrected before an FHA loan can be granted.

Even though you may save a few buck on the purchase, some of these home are move-in ready and won’t require any repairs at all. With most you must take into account what repairs will be needed to complete to bring the home up to your standard of living, before you submit an offer. If you can purchase the home for $10,000 below market value, but it requires $15,000 in repairs, new carpet, and paint….how much money did you save buying a foreclosure?

Many buyers call our office asking for a list of foreclosed homes thinking they are going to get a steal of a deal, but be aware that the repairs that may be needed and the cosmetic work you may have to put into it, may make the idea of buying a foreclosed property a little less appealing for most people. There are some bargains to be had with foreclosed home, just be sure you evaluate all the numbers before you jump right in.

If you’d like to see what is available with a free list of foreclosed properties call us at (785) 271-0348.

Buying a home is a great investment, but trying to flip a home can be a risky endeavor. Coldwell Banker President & CEO, Jim Gillespie, talks about the risks of flipping a home.

Always talk to your local REALTOR(r) for more information on how to flip properties for profit. If you’d like to talk to a REALTOR(r) today call us at (785) 271-0348.

Uncle Sam to the rescue? The government is here to help us? Frankly, both of those statements cause me pause. But I think the move by our federal government to take over the operations of these two companies was the correct option, given that the government has been watching Rome burn for the past couple of years. The feds allowed both companies ample opportunity to fix their own problems. There is no doubt lending standards have been too lax for markets that are not appreciating at 20% annually. Both Fannie and Freddie failed to adjust when those coastal and desert regions could not sustain that level of appreciation. With Uncle Sam to the rescue, I think we will see a continued tightening of eligibility standards for borrowers…but the pendulum had swung too far, SO THIS IS A GOOD THING.

More restrictive standards for borrowers (anticipated as a result of the government takeover) means mortgage holders and investors will be more secure when they invest in mortgages for the housing market. A more secure investment means that investors will not demand as high of a return. THAT IS WHY INTEREST RATES DROPPED THE WEEK following the takeover.

Topeka area real estate values remain stable as they have been for the past decade. The issues creating problems for the mortgage industry were not issues created in Topeka; we just get lumped in with the rest of the national sound bites. What will be most helpful for our market resulting from this takeover is that the investment community is more confident in the mortgage industry this week than they have been since May of last year. Buyers with good credit and a modest down payment can still get a GREAT loan and a fair price for home in our area.

What about the future? I have no crystal ball here. If the housing markets in the California, Arizona, Nevada, Florida markets begin to stabilize, Matt Lauer’s sound bites will get better. The confidence in the security of a home mortgage will strengthen and interest rates will continue at these great levels for qualified buyers. If investors believe we are not reaching the bottom of the market, rates will probably start inching upward along with down payment requirements. I have run out of lipstick…

Bryon R. Schlosser, CEO
Griffith & Blair American Home Services