Michigan Foreclosure Purchase- Surviving a Tough Transaction
Let's face it, the only properties that are really selling in Michigan, well most of the country actually are foreclosures. While this market does present a unique opportunity for purchasers to end up with a steal, it is also a very tough transaction which will require a lot of patience and savvy on your part. I offer you this Foreclosure Survival Guide now, to hopefully save you some headaches once you are already in the process.
1. Patience Really is a Virtue. The first thing to realize is that purchasing a home is in many ways exciting and in even more ways stressful. It used to be, that we could get a purchase mortgage closed in about 2 weeks. With a foreclosure purchase, it could take 2 weeks just to get the bank (meaning the bank that owns the property) to sign a purchase agreement. In general, you should plan on about 25-45 days from start to finish. Most of this depends on the bank and how fast they are to respond.
2. Expect the Unexpected...huh? Dealing with a bank as the seller of a property means dealing with the countless attorneys the bank has hired to mitigate the transaction, create lengthy paperwork, and figure out how to get the best of you. To be straight with you...you could hire Columbo, McGuyver, and Chuck Norris as your loan officers and even they would stand no chance of decrypting all of the different things that will transpire during a foreclosure sale. Keep in mind that the most important question is this: Is my reward worth the effort? In most cases it will be, sometimes it will not. Ultimately it is important to keep in mind that things will arise as you move along, not at the beginning so make sure that you agree at the outset of the transaction to be willing to roll with the punches. If you are not willing to fight ‘til the finish, don't start.
3. Ask Questions! Always ask these questions and ask them as early in the transaction as possible-
To your realtor: If repairs are necessary who will pay for them? Is there anything the bank does not have to disclose about the property upfront? Can I access the property if minor repairs are needed? Do you have a relationship with the listing realtor? Are the taxes disclosed on the listing the same taxes I will be responsible for at closing? *This one often misleads buyers into extra charges at closing. What exactly will the bank cover with concessions? *Often times, the bank will not pay for pro-rated taxes or pre-paids with concessions... which is just silly, but may happen.
To your loan officer: When will the loan actually fund? *You won't get your keys until the bank gets their money. Have you done a foreclosure purchase before? How many? What do I need to pay at closing time? If what I need to bring to closing changes, who will be responsible for paying it? Why? When will you lock my rate, how often will you update me? *This is important because a foreclosure purchase will usually take close to or more than 30 days to close and fund. It is generally impractical to lock a rate for more than 30 days, and any good loan officer will update you when rates change and give you the option to chose when to lock while advising you based on market trends. Are you available to me outside of banking hours? Most of you are working people, and the banking system is setup to function 9-5...the same hours that most of you have to work. It is important to have contact info and know that your loan officer is available to answer your questions at any time, otherwise you will end up a very frustrated individual. It is best to test this theory right out of the gate by calling after hours and expect your loan officer to either answer the phone or call you back within an hour or two...which leads into the most important point.
4. Choose your Loan Officer Carefully: The weirdest part, I find, is that people usually are more particular about their Realtor than their Loan Officer. In reality, your Loan Officer is responsible for an awful lot of work, especially in a foreclosure transaction. This is a very good time to realize that cheaper doesn't always mean better. Your loan officer is a person that will be going through your tax returns, bank statements, and credit history to name a few. If you want my honest opinion on how to get the best out of any loan officer here it is: Ask lots of questions upfront, make sure you know what your Loan Officer is making and you feel they are worth that amount, and demand excellence from all those you pay good money to.
© 2008 Matthew Watts
1. Patience Really is a Virtue. The first thing to realize is that purchasing a home is in many ways exciting and in even more ways stressful. It used to be, that we could get a purchase mortgage closed in about 2 weeks. With a foreclosure purchase, it could take 2 weeks just to get the bank (meaning the bank that owns the property) to sign a purchase agreement. In general, you should plan on about 25-45 days from start to finish. Most of this depends on the bank and how fast they are to respond.
2. Expect the Unexpected...huh? Dealing with a bank as the seller of a property means dealing with the countless attorneys the bank has hired to mitigate the transaction, create lengthy paperwork, and figure out how to get the best of you. To be straight with you...you could hire Columbo, McGuyver, and Chuck Norris as your loan officers and even they would stand no chance of decrypting all of the different things that will transpire during a foreclosure sale. Keep in mind that the most important question is this: Is my reward worth the effort? In most cases it will be, sometimes it will not. Ultimately it is important to keep in mind that things will arise as you move along, not at the beginning so make sure that you agree at the outset of the transaction to be willing to roll with the punches. If you are not willing to fight ‘til the finish, don't start.
3. Ask Questions! Always ask these questions and ask them as early in the transaction as possible-
To your realtor: If repairs are necessary who will pay for them? Is there anything the bank does not have to disclose about the property upfront? Can I access the property if minor repairs are needed? Do you have a relationship with the listing realtor? Are the taxes disclosed on the listing the same taxes I will be responsible for at closing? *This one often misleads buyers into extra charges at closing. What exactly will the bank cover with concessions? *Often times, the bank will not pay for pro-rated taxes or pre-paids with concessions... which is just silly, but may happen.
To your loan officer: When will the loan actually fund? *You won't get your keys until the bank gets their money. Have you done a foreclosure purchase before? How many? What do I need to pay at closing time? If what I need to bring to closing changes, who will be responsible for paying it? Why? When will you lock my rate, how often will you update me? *This is important because a foreclosure purchase will usually take close to or more than 30 days to close and fund. It is generally impractical to lock a rate for more than 30 days, and any good loan officer will update you when rates change and give you the option to chose when to lock while advising you based on market trends. Are you available to me outside of banking hours? Most of you are working people, and the banking system is setup to function 9-5...the same hours that most of you have to work. It is important to have contact info and know that your loan officer is available to answer your questions at any time, otherwise you will end up a very frustrated individual. It is best to test this theory right out of the gate by calling after hours and expect your loan officer to either answer the phone or call you back within an hour or two...which leads into the most important point.
4. Choose your Loan Officer Carefully: The weirdest part, I find, is that people usually are more particular about their Realtor than their Loan Officer. In reality, your Loan Officer is responsible for an awful lot of work, especially in a foreclosure transaction. This is a very good time to realize that cheaper doesn't always mean better. Your loan officer is a person that will be going through your tax returns, bank statements, and credit history to name a few. If you want my honest opinion on how to get the best out of any loan officer here it is: Ask lots of questions upfront, make sure you know what your Loan Officer is making and you feel they are worth that amount, and demand excellence from all those you pay good money to.
© 2008 Matthew Watts
Comments