Either as a home buyer or investor, there are many residential properties that could be had at a bargain. Your real estate agent can find many of these types of properties in the Multiple Listing Service or MLS (a website where all the real estate agent’s pool their listed properties for sale). Today we will go over the different types of properties that usually can be had at below market value there. I will also include all the drawbacks so you could get the good, the bad, and the ugly.
These are properties that are administered by the state to be sold when a person who passed away didn’t leave a will/testament. Since there is no will, therefore no direction as to who will possess the property, the state will sell the property and distribute it among heirs. The price that the probate lawyer places are usually below market value.
- You will be required to place a 10% initial deposit in escrow.
- Even if they accept your offer you must go to Court to defend yourself. Somebody can actually show up to to outbid you in court (it happened to me once, bummer). The scenario begins to play out like an auction. If there is another bid and it’s higher than you are willing to pay, it might be better to walk. At least you tried, right!
- If you pay for an inspection and get outbid you will lose the cost of inspection.
Foreclosures or REO’s
A foreclosure happens when a bank gains possession of a property that the owner has defaulted on. They can also be called REO’s or Real Estate Owned. All foreclosures have a case file administrator that represents the bank in the transaction. Their job is to unload the property as quickly and efficiently as possible. That usually means below market prices!
- There will be no disclosures about the condition of the property.
- You must buy the property “as-is” with no repairs, no credits for repairs, and enter an agreement saying so in the purchase contract. However, if by remote chance, there is some type of vandalism from the time of the purchase agreement, they may compensate to cover damages in a form of a credit if you request it.
This type of sale can happen when the owner has missed some mortgage payments and the home is underwater, meaning that the property’s is worth less than what is owed. Both the owner and the bank work together to unload/sell the property. These are usually great deals!
- If the owner accepts your offer the bank administrator will still have to approve the price. They may approve or they may not.
- Sometimes the time frames will be longer primarily due to bank administrator red tape and bureaucracy.
100 Day Property
This is an often forgotten bargain property and there are many of them out there. These are properties that have been out on the market for more than 100 days. Many agents and buyers think that something must be majorly wrong if they haven’t sold by that time and tend to ignore them. Sometimes it is something major, however, sometimes it might be as simple as bad choice of colors, dirty carpet, or they just overpriced it from the start. Most of these homes are not priced below market although some are. You get the bargain price by submitting a low ball offer. Since the property has been languishing for months the owner will be more likely to consider it, if not, at least, entertain your low ball offer.
- You may have to submit several offers to get the right deal.
- You will have to have your agent comb through the better priced listings.
Now that you know the many bargain properties in the Multiple Listing Service. Call your real estate agent today to show you some. You might find your next bargain property! Wait…there is one more…..almost forgot….
EXTRA: Good Neighbor Next Door Program
Have you ever wanted to get a property at a 50% discount? Well if you are a firefighter, police officer, teacher, or EMT you can! Unfortunately these properties are NOT in the MLS but are found in the HUD Home Store website. Getting a property at half price is the bargain of a lifetime! However, there are drawbacks.
- The inventory for the program are very low.
- The property will be in a designated “revitalized zone”usually in a low income or an up and coming area.
- You must occupy the property for a minimum of 3 years.
- These properties are exclusive to firefighters, police officers, teachers, and EMT’s.
- The properties are won through lottery (usually there aren’t not that many bidders so your chances are pretty good despite this drawback).
There you have it! Good look shopping!