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There are different types of foreclosed homes
Foreclosure Properties for Buyers — Just the Facts
For a FREE List of Foreclosures email Kathy Torline at KTorline@msn.com
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Buying a home that has been foreclosed on can be a very good deal, especially if you have money to invest
in fixing it up. Buyers may end up with more in equity than the amount they spend fixing the property, particularly when they do some of the work yourself. Even if you’re a first time homebuyer with no money for cosmetic or other repairs, a foreclosure may be within your reach with creative financing that allows you to finance the repairs based on the repaired value of the home.
As I was writing this article, I went to the local Multiple Listing Service and searched for all of the properties that said they were currently listed and classified as Bank owned. The search came up with 323 Bank owned properties, which is about 5% of the homes currently listed for sale. If you want a list of these properties, call or email Kathy or Nancy.
The following is a brief explanation of the majority of foreclosure properties available for buyers to purchase.
(1) Bank Owned: These type of properties are also called Real Estate owned or REO. The bank has already foreclosed, and the bank now owns the property. They are typically sold “as-is”, which means that the bank won’t do any repairs to the property. In Colorado, and Colorado Springs, the majority of Bank Owned homes are listed in the local Multiple Listing Service. The homes don’t have any liens or mortgage on them. The acceptance time can be fairly quick and many banks will also have additional addendums they require the buyer to sign off on. Many bank-owned properties are distressed and in need of TLC and major repair.
(2) HUD: These type of properties have also already been foreclosed on, and the Government now owns the property. The properties were originally purchased with FHA financing, and the homes were foreclosed on by the government. In Colorado, and in Colorado Springs, the majority of HUD properties are listed in the local Multiple Listing Service. The homes don’t have any liens or mortgage on them. These homes are also listed on Michaelson, Connor and Boul web site, which is the company that manages all aspects of HUD properties in Colorado. These are sold on a bid basis and are “as-is”; and the bid with the highest NET is typically awarded the home. Some properties are available only for owner occupants to bid on to purchase. HUD properties have their own forms that are required to be used as part of the bid process. Many of these properties are also distressed and in need of TLC and some need major repair. A comprehensive property report is included on the McBreo web site which summarizes the repairs needed on the property. (See related articles: Buying HUD homes in Colorado Springs, Part II, and Buying HUD homes in Colorado Springs, Part I.
(3) VA Repos: These type of properties have also already been foreclosed, and the Government now owns the property. These properties were originally purchased with VA loans. In Colorado, and in Colorado Springs, the majority of VA repo properties are listed in the local Multiple Listing Service. The homes don’t have any liens or mortgage on them. These homes are also listed on Owcen web site. Many of these properties are also distressed and in need of TLC and major repairs. You do not need to be a veteran to buy a VA Repo home.
NOTE: One common misconception is that it’s easier for someone to buy a government repo because the government will make it easier to get a loan. Not true! Only a small portion of all HUD/VA repo’s are eligible for an FHA or VA loan because so many homes have major repairs that need to be done. A conventional loan may be the only way to borrow money to purchase the property.
If you enjoyed reading this article, why not Kathy (719-287-1049) KTorline@msn.com
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