Many potential home buyers assume that any foreclosure property will be bargain-priced, but this isn’t always true. Banks want to get as much as they can for a home, and many factors go into their pricing strategies, including comparable sales in the area, the local real estate market, and how much the previous owner owed on the mortgage. This doesn’t mean great foreclosure deals aren’t out there in San Diego. It just means they can be a little tricky to find. Here are some tips for getting the best price on a foreclosure and potentially saving 10 to 20 percent off market value.
Search for Properties That Have Been on the Market for a While
A great bank-owned property that has been on the market for just a few days is unlikely to go for a discount, but that same property may be available for a steal after it’s been sitting for a few weeks or months. Banks will be reluctant to take a lowball offer on a just-listed property and many have guidelines regarding how much of a reduction they will accept within a specific period. If you want a lower price, look for condos and lofts for sale in Cortez Hill San Diego that have been listed for at least 90 days.
Look Beyond the MLS
The MLS is an excellent place to begin any home search, but it’s not the only resource available. Foreclosures listed on the MLS also mean plenty of competition. If you want the cheapest price, try looking for foreclosed downtown Gaslamp Quarter condos for sale at a sheriff’s or trustee’s auction. These sales are announced in local newspapers and online. The main downside to this option is you will need to pay cash and buy the home as-is, although you can still do a preliminary title search for liens and past-due HOA fees before bidding.
Buy a Real Estate Owned (REO) Home Through an Agent
When a property goes up for sale at an auction and there are no bids or bids don’t cover the outstanding balance, the bank holding the loan gets the title. Once this happens, the home is called a real estate owned (REO) property. It’s common for banks to then repair major damage and hire a local real estate agent to market the home. When you buy your home through an agent specializing in REOs, you can see what’s inside to know precisely what you are buying.
Don’t Get Trapped in a Bidding War
It’s a common tactic to list foreclosures for far less than they are worth to grab attention as well as multiple offers. This strategy often pays off because buyers become emotionally attached to the home and get into bidding wars. Before you fall in love and make an offer, research what the home is worth and what comparables have sold for recently.
Know How Much You Need to Put into a Home
Homes that seem to need major rehab work commonly go for far less than market value because they turn off most buyers. Despite the neglected appearance, missing appliances, and other issues, you may find that the necessary work won’t cost as much as you think. Get a home inspection before buying a foreclosure because the bank isn’t required to offer disclosures. From there, you can get an estimate for repairs from a licensed contractor to make an informed decision and more accurately gauge whether the price is reasonable.
Whether it’s a foreclosure or a regular sale, owning a property in downtown San Diego comes with many benefits. If you’re interested in condos, lofts, or penthouses in 92101, get in touch with the real estate experts at 92101 Urban Living today. Call 619-649-0368 to schedule an appointment.