By Guest Author, Brian Frey
Finding a good deal in a competitive market can be tough, but not impossible. It is all a matter of how much work you are willing to put in. For most people, a home is the most expensive purchase. Everyone wants to get the “best deal.” There are some lesser known ways to find a bargain property.
Cash is King
When you bring cash to a real estate transaction the entire process can move quickly. You can close within 10 days from an accepted offer. You don’t have to worry about appraisals, TRID (purchaser must sign off on the closing disclosures within 3 business days prior to closing), and some cash buyers even waive inspections, although not recommended unless you are a professional. Because cash can move a sale so quickly, sellers see the advantage when considering offers, not to mention in some of the examples below it is the only form of payment accepted.
Sadly, people pass and leave property behind. That property gets inherited, and often the inheritor had no plans of occupying the property. They would like nothing more than to sell said property quickly. The problem: you don’t know how many parties you are working with? An estate can be left to multiple family members – all of which would have to sign off on an accepted offer, and all family members may not want the same outcome or amount. These can be tricky, but keep an eye open for them. Families may not want the extra tax and utilities burden and these properties may be under market value.
Real Estate Owned (REO) properties, also known as foreclosures, are bank owned properties. These listings occur when a borrower has defaulted on their loan and the bank attempts to sell that property to help recoup their loss. There are a few kinds of REO’s to specifically highlight.
Housing and Urban Development (HUD): Foreclosure on a FHA (Federal Housing Administration) insured mortgage. This year some of the best deals on the MLS came from HUD homes. HUD Homes start with the “exclusive” period in which only eligible governmental entities, HUD-approved nonprofits, and owner-occupant buyers may submit bids. This period is typically the first 14 days that the house is on the market. The next step, if it makes it that far, is the “extended” phase, where the property becomes open to investors and anyone is welcome to bid on the home. HUDHomeStore.com
HomePath: Foreclosure on a Fannie Mae property. Just like the exclusive period that a HUD home would have, HomePath goes through a “First Look” phase that typically lasts 20 days and is open to owner occupants, public entities and their partners, and some non-profits. Deals here are comparable to HUD homes, but there aren’t as many available in our county. Homepath.com
This occurs when the net proceeds from the sale of the property are short of the debts secured by liens. The sale goes through when all lien holders agree to accept a lesser amount owed on the debt. Once the seller accepts the offer, the bank has to agree as the home owner owes more than the sale price of the home. The name may be misleading, as short sales may take several months to close. There are a lot of people that have to approve before the lender agrees to take a loss.
Just like eBay for homes, there are many websites offering homes for auction. These are strictly cash deals and work just like an auction, highest bidder wins. Online auctions last a couple days, where the local auctions are handled same day. The caveat of buying real estate through auctions are that most of these listings are sight unseen, high risk, potential high reward. They don’t typically involve real estate agents. There are no inspections allowed. Auction homes typically have either a starting bid high enough to where they’d accept the offer or have a reserve price. A reserve price is the minimum price the auction will accept for the sale of the property, this number is not often disclosed. The property may come with people living inside which you will be required to evict.
These homes are a forced sale and auctioned off due to back taxes. We have a big sale August 30th, starting at noon at the Blue Water Convention Center. For a list of available properties follow the link: https://www.tax-sale.info/
Auction.com & Other Website Auctions
Probably the most well-known online real estate auction site is Auction.com. You are often required to put down a refundable deposit that starts around $2,500 to even place a bid. These properties may be subject to redemption, meaning if the original owner pays off the debt they can redeem and keep the property. That can make the entire process a waste of your time – even if you had the winning bid.
For Sale By Owner (FSBO), typically do not have proper representation. They may not know what they have or what it is worth. What most FSBO’s know is what they’ve paid for the property. The disconnect is they don’t know what the current market really supports for accurate price. They try selling for what their neighbors are asking or what Zillow says, not realizing these might not be the best comparable prices. The real problem is anyone can ask any amount of money for their home, but it’s what homes sell for, what people are actually willing to pay, that determines a home’s worth.
Urban Pioneer Program
This program is a grant of up to $5,000 from the city of Port Huron to assist in down payments and closing costs when buying a home within the city of Port Huron.
- Applicants must not own any other real estate and live in subject property.
- Applicants must qualify through a local mortgage company.
- Applicants must be willing to attend a financial literacy class.
The down payment assistance may be used towards down payment and closing costs. If the buyer remains in the home for five years the loan is completely forgiven. If the buyer sells within the five years, a percentage of the profits, or a prorated percentage of the loan must be paid back to the city.
There are still plenty of great deals to be found, working with an educated, well-informed local realtor is often the best way to find them. Like any investing, there are some risks associated with buying real estate, some ways have greater risk than others. No matter if you are a first time home buyer or a seasoned veteran, make sure you understand the type of contract you are entering and vet your potential properties prior to signing anything. If you are looking to buy, sell or invest in real estate, contact Brian Frey at Keller Williams Port Huron Business Center or That1House.com.
Have you had success finding good deals in real estate? Share your experiences below!
Brian Frey is a licensed Realtor at Keller Williams Port Huron Business Center and a local Real Estate investor. He is a member of Eastern Thumb Association Realtors, Blue Water Chamber, Young Professionals, Port Huron Area Landlord Association, Blue Water Start Ups. He and his wife Katie Kuhn enjoy the Blue Water life that Port Huron has to offer.
Brian Frey REALTOR
Keller Williams Port Huron Business Center
3750 Pine Grove, Fort Gratiot 48059