RealtyTrace has released a new report last week saying that around 7 million US homeowners who lost their houses are now in a good position to buy again.
Short sales and foreclosures have increased exponentially 7 years ago after the so-called Great Recession and the years of financial crisis. Now, with the economy finally getting its momentum and employment rate increasing, homeowners who got foreclosures could have a good chance in the market again.
According to analysts from The Cathford Group Credit Inc., although the modest estimate of rebuilding a decent credit score is 7 years, it is possible for homeowners to recover from their foreclosures in as soon as 3 years. This is good news for owners who lost their properties during the financial crisis of 2007 as they should be able to qualify now for a new loan.
So if you're one of those, here are a few tips to guide you in purchasing a foreclosed house:
- Go online and search for REO (real estate owned by a bank) property listings in your chosen area. The REO tag means that the house has been foreclosed and that it is now put on the market by the lender.
- A foreclosed house come "as is", which means that the buyer will have to shoulder costs for any repairs on the house that might be involved. And there is very little room for negotiation so don't keep your hopes up for any discount.
- Secure a pre-approval letter from your lender even before you start making offers. Oftentimes, buyers would remember to engage a real estate broker first thing, and then forget the all important factor of how to get financing. Keep in mind that banks will almost always require proof of financial capability so this letter is essential -- unless of course you're paying in cash.
The letter should state just how much money you're qualified to borrow depending on your income and credit score, as per the analysis of your lender. This has an added benefit of showing your real estate agent that you're really serious about making a purchase -- an important factor for the agent to choose who to prioritize among his several clients.
- Check recent prices of comparable properties in the area of your choice.
- The Cathford Group Credit Inc. was able to determine a number of markets which are expected to have the most number of prospective buyers. Areas like Las Vegas that are hit the most during the crisis will now have house prices significantly cheaper for average buyers to afford. But because it is expected that the majority of the market consists of the Baby Boomers and Generation X, areas like Minneapolis, Chicago or Florida will top the lists.