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Buying New Jersey Foreclosure Real Estate
By admin | November 23, 2008
Things to know when thinking about buying New Jersey foreclosure real estate.
1. Bank owned homes (foreclosures) are always As Is, no warranty expressed or implied. They will not accept any home inspection contingencies or make any repairs for you. You can do a home inspection but it is for your own information, and it would be wise to do it fast and before you are locked into the deal. In New Jersey we have the attorney review period so it is wise to get your informational home inspection done before coming out of attorney review.
2. Bank owned homes (foreclosures) do not have disclosure statements. The bank knows nothing about the home and will not make any representations about it. I have made bids on homes which had 2 new heating systems 2 new central air conditioning systems and more bathrooms than the bank acknowledged. All of these things made the home worth much more than it otherwise would have been, but the bank knew nothing about them.
3. The bank will want to move quickly once you have made an acceptable offer. Once you are under contract, expect for the foreclosure bank to want to close in 30 days or less.
4. Banks are not dumb, acceptable offers on bank owned properties will make financial sense. If the foreclosed home needs 50K worth of work and is priced at 200K in a neighborhood that sells for 350K they are not going to accept your offer for 125K. If you are not making an offer within 10% of the asking price that chances they are going to accept your offer are very low. On the flip side of that, many banks will lower the price on these REO (real estate owned) homes 5% every 30 days until they get acceptable offers.
5. Many times foreclosure homes will sell above asking price. I have experienced this first hand, I bid on a home in New Jersey a few weeks ago at 200K. Almost immediately I got a response from the real estate agent for the foreclosure telling me that they had 3 or 4 other offers and instructing me to come back within two days with my highest and best offer. The foreclosure home got bid up 10% above the banks asking price. The lesson here is, if the deal looks really good, others will notice as well and the home will likely sell fast and for more than the foreclosure banks asking price.
6. The highest and best offer wins, if you make a offer on a foreclosure home but need to get financing, or you ask for the bank to help you with closing costs, but someone else offers a similar amount and will be paying cash and not asking the bank to help with closing costs the bank is going to pick the cash offer every time. Another example is if you offer more but need to close in 90 days, but someone else will close in 30 days and both offers are acceptable to the bank, the bank will take the offer that is in 30 days.
7. Mortgage Pre-Approval required. Just like with making an offer on normal resale real estate you will need to have an up-to-date mortgage pre-approval completed to supply with your offer on bank owned property. In many cases the Foreclosure Bank will require you to get a pre-approval through them. This gives them much more insight into your ability to complete the transaction, and also allows them to make a little bit of money back on the loss they are likely taking on the real estate.
Thinking of investing in New Jersey real estate? Visit the Morris County NJ home search, where you can find every home currently listed for sale in our local Multiple Listing Service (MLS). There are many great deals to be had in this current real estate cycle, some of these great deals are foreclosures, and some of the great deals are just home owners who need to sell in order to move on with their lives.
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One Response to “Buying New Jersey Foreclosure Real Estate”
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December 26th, 2008 at 11:19 pm
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