Hiring a real estate broker
or searching the newspaper ads or real estate magazines are some of the common and traditional ways buyers look for real estate and homes. There are many other options, though. Many aren't new, but they're becoming increasingly popular as the US economy and housing market recover from the Great Recession
It's possible you may find your dream home, a nice investment or the deal of a lifetime using any of these strategies. Just make sure you're aware of the risks and pitfalls beforehand.
Real Estate Options Everywhere
The ways you can find and buy real estate are really only limited by your imagination and determination, but here are some strategies buyers are using to find deals:
Foreclosures & Short Sales
If you read the paper, watch TV or listen to the radio for only a few minutes on any given day, you're sure to come across someone touting foreclosure sales as the way to get your dream home or investment property for pennies on the dollar.
Likewise, short-sales, where the homeowner avoids foreclosure by selling the house for less than what's owed on the mortgage, are advertised by sellers and banks as a great money-saving strategy.
They aren't lying, either. You can find a deal. But, they're not exactly telling you everything. For instance:
- A short-sale can only go through if the bank agrees to it, and that can take weeks or months
- There's no guarantee the bank won't foreclose, even if you've made an offer on the home in short-sale
- The bank doesn't have to sell to the highest bidder at a foreclosure sale, and rest assured it won't sell if the highest offer doesn't cover most if not all of the outstanding balance on the mortgage
- The foreclosure scandal slowed down the sale of homes, and may continue to do so as banks and lenders strive to make sure all the Ts are crossed and Is are dotted in their mortgage and foreclosure papers and processes
Bank Sales & REOs
Real-estate-owned properties (REOs) are becoming very popular, especially as alternatives to short-sales. Here, when a bank or mortgage lender isn't happy with the bids a foreclosure sale, it buys the property and sells it as an REO.
As a general rule, banks don't want to own property. They deal in money, after all. So, one of the advantages to REOs is that banks tends to move quickly and accept the first good offer it gets that comes close to what they paid for the houses.
There are some risks and pitfalls to be wary of:
- Odds are, you aren't the only one interested in the house, so don't be surprised if your offer isn't the first and isn't the best, at least in the bank's opinion
- There may not be many REOs in the area you're looking at, and banks are being cautious not to put too many REOs on the market at one time so as not to drive down real estate prices even more
- The house comes as-is, and you can expect to find problems that need fixing, especially if a house sat vacant for months or years during the foreclosure process