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Their Loss…Your Gain?
Investing in Bank Owned Properties
So, you think you want to buy Anchorage Foreclosures? You think it is a great way to earn instant equity for a home you will live in, equity in a long-term investment or a great profit in a short term “flip? ” I could not agree more! I love Anchorage Foreclosures! This is the class of property that I consider value property and for a period of time, Anchorage Foreclosures represented 30% of my sales.
Several things to consider before you decide. Let me elaborate and define some terms and make sure we know the difference between Anchorage Foreclosures and a Bank Owned Property. The properties listed below are “Bank Owned” (see next section for defintions). At this time, the fixer-upper and short sale searches are not available on my site. However, message me and I will be happy to set you up with a direct link to the MLS for all Bank Owned, Short Sale and Fixer Upper Properties.
Foreclosure vs. Bank Owned
Anchorage Foreclosures are properties that are behind on payments, or in some form of default, and are in a stage of the process called “foreclosure”, which in most cases, is Non-Judicial, meaning they are in a completely administrative process and are handled administratively through title companies. Anchorage Foreclosures are in a process of public advertisement and notification, a sale, normally at the Anchorage courthouse is “cried” by a local title company, for a minimum bid amount, which will include unpaid balance and fees associated with the foreclosure. At sales of Anchorage Foreclosures, Certified Funds or Cash is required, on your person, for the full bid amount. There are no mortgage loans involved. Only CASH BUYERS can purchase Anchorage Foreclosures at the courthouse steps. The property is either sold to the cash buyer at the minimum bid or higher, or is returned to the bank, where it is now classified as a “Bank Owned” property.
As a rule, Realtors do not get involved with Anchorage Foreclosures. There is a high percentage of properties that “cure” prior to the sale or are postponed. This is a very specialized investor market. Very rarely is the investor able to see inside the property to see condition and it could take additional court time to remove occupants.
Bank Owned Properties are what most people are thinking of when they are thinking of Anchorage Foreclosures. These are normally available to the public, available to finance and follow the normal process of offer, counter offer, acceptance of any other property on the market. The only difference? The owner is the bank.
You should consider the following when thinking of buying a Bank Owned Property. Generally, Bank Owned Properties have no property disclosure, many times utilities have been turned off and pipes could be freeze damaged, repairs may not be allowed prior to closing, normal review of resale certificate information may not be available for properties subject to a home owners’ association and typical closing costs associated with Anchorage sellers, may be the responsibility of the Buyer. All in all, these additional costs are about $2,500 higher out of pocket in hard costs and do add an extra layer of risk.
Still, I love Bank Owned Properties. These are the class of property that I consider value property and for a period of time, 30% of my sales were in the area. But let me be clear. Unless you have the financial and emotional means to take on a Bank Owned Property, you may be better served with the normal buying process. They are NOT for everyone.
See other links:
The HUD Homestore
Are you an Investor or an Owner Occupant?
Investors – Long Term Hold and Flippers
Some bank owned properties have a period of time where they are only available to owner occupants and not to investors. Typically these are federally insured loan programs. On these properties, you will sign an Owner Occupant Affidavit. DO NOT buy a property desiginated for owner occupants if you are an investor. Going to jail can create a real negative return! It is not worth it.
“The Money is Made When Your Buy, Not When You Sell!” You cannot make money on a flip property if you do not buy it right. I know! I have personally flipped over 600 front doors. You have to know the ARV (After Repaired Value), the cost to sell your property, the cost to hold your property during the renovation and sales process, the Cost to Renovate, the Cost to Finance the purchase and renovation, the Desired Profit, and the Cost of the Property. You DO NOT start at the purchase price. That lesson is free. “The math never lies!”
Financing for Flipping is typically, in order of lowest cost to highest cost, Cash, Home Equity Lines of Credit on existing properties, Conventional Non-Owner Occupied Loans, Construction Loans, and Hard Money Lenders. If you need help with financing a Flip Property, contact me. I have many contacts in the industry and can steer you in the right direction.
Owner Occupants – Equity Builders
My favorite Buyer! Hey, if an investor buys, great. Good chance I get to list it too. But if an Owner Occupant gets into one of these value properties, they can walk in with $30,0000, $50,000, and maybe even more equity just by buying a property. Fantastical! I have clients that I am confident have added over $100,000 to thier bottom line by purchasing one of these properties.
Financing an Owner Occupant property can be any of the items included in the Flipping catagory, but also includes many loan programs that allow Buyers to include the cost of renovations to the properties, with little additional out of pocket costs. Again, if you are looking to buy one of these types of properties, contact me and I will set you up with lender contacts. Apply for Renovation Loan Here for Anchorage Foreclosures.