Welcome to Real Estate Houston Texas | Buy Bank Owned Homes With No Downpayment

Probably you have heard about all the buzz about buying foreclosures in Houston but you do not know how to start or what approach to use or perhaps you have already been looking to some properties or even perhaps you have placed an offer on one. Here I will give you five secrets about buying foreclosures in Houston, Texas.

First, you can bid lower than the asking price, and you should start lower. How much lower it depends on the desirability of the property, the days on market, whether or not there are offers already, and, of course, the comparable sales in the area. Your Houston REALTOR® should provide the latter before an offer is placed.

Second, Houston foreclosures advertise that they sell the house AS IS as they do not intend to repair the property. Just think about it, the bank’s employee who is managing this asset is sitting somewhere in an office in another state -other than Texas- and the last thing he wants to hear is your request for repairs. He will argue that you saw the condition of the property before you placed an offer, and that you should have taken that into account. However, if after receiving the inspection report you found some serious problems that were not visible to the naked eye, you can request the bank to account for those repairs. How much you get the bank to take care of that depends on the bank and the skill negotiations of your Hosuton REALTOR®.

Third, not all foreclosures are created equal. Not every Houston foreclosure is necessarily a good deal. Some foreclosures are sold for values close to the regular sales. There is a way to identify the best deals in your area of interest and receive only those directly to your email address so you only focus on the best ones.

Fourth, the Houston Real Estate foreclosure’s listing broker pays the commission of the buyer’s agent. Therefore your REALTOR® will be compensated only when you close on your house.

Fifth, start your search on Monday or Tuesday as Real Estate buyers are usually out during the last part of the week, and you maybe lucky to get your offer accepted before the weekend comes when most of the activity happens.

A short sale is defined as an approved discount by a bank or mortgage lender of the balance owed by the homeowner as a result of two fundamental conditions:

The first one is when a homeowner is experiencing financial hardship such as loss of employment, an illness in the family, divorce, lack of savings, or any other situation that makes it impossible for the homeowner to keep current in his mortgage payments.

The second important condition is that the property can not be sold in the free market for what is owed on the property. Basically, the homeowner is upside-down in his mortgage. This situation is even more aggravated if the homeowner was not paying his mortgage for several months, and late fees, attorney’s fees, and HOA dues have been added to the debt.

If these two conditions exist simultaneously, then the homeowner can hire a Houston REALTOR® to list the property and request the lender to approve a short sale.

The benefits for a homeowner to use a short sale instead of walking away from the property is that this shows responsibility in part of the homeowner as he is trying to help the lender diminish its losses. That is why the impact on the homeowner’s credit report is not as catastrophic as a straight foreclosure. Two years after the short sale, the homeowner will be able to buy again.

Once an Earnest Money Real Estate contract is received and sent to the lender, the lender orders a BPO (Broker’s Price Opinion) on the property. Sometimes they order two, from two different brokers, to  estimate the actual market value of the property. If the offer matches this value, the lender will approve the short sale, and the property will go to closing.

An important issue to take into account is that the difference between what was owed and what the bank receives is considered a deficiency judgement. In ordinary times, the IRS will consider this a taxable gift to the homeowner (ordinary income). However, for the time being this is not the case for homeowners as a result of the financial crisis.

Now, once we have detailed the short sale process, you should be aware of the following facts:

1. In our Houston Real Estate market, only 1 out of 3 short sale listings close successfully. That is, the rest go to foreclosure anyway as the lender’s realizes that they will make more money by going through a straight foreclosure as all the other debts (home equity loans, second mortgage, mechanical liens, etc) are wiped out with the exception of IRS liens, property taxes and HOA dues.

2. The listing price does not represent the actual price required by the lender as it is an estimated price established by the listing agent. The lender will establish the final sales price and they will attempt to sell for the highest “market value” possible. That is why lenders will not approve a short sale unless the property has been listed with a REALTOR® for maximum exposure.

3. The lenders are now receiving an average of 100s short sale files a week so if the listing agent did not send “all” the required documentation proving all the above facts, the file will be moved to a second pile of incomplete files, and this will delay the process significantly.

4. Lenders are taking anywhere from 60 to 120 days to even acknowledge your offer. Some other short sales may take up to a year.

5. Many Houston Real Estate short sale listings are being listed as active in the MLS for weeks or even months, eventhough there is already a signed contract between the seller and a buyer and this contract has already been forwarded to the lenders.

6. Many times lenders will not agree to help buyers with closing costs as this impedes them to recoup their losses.

7. Certified Distressed Property Experts (C.D.P.E) REALTORS® are trained to navigate through the complexities of this process.

So, the next time you consider listing or buying a short sale property, hire a C.D.P.E. to help you navigate through this process.

As of today, in our Houston market, closing on a house takes an average of 30 to 60 days as this issue often depends on four factors:

First, how soon you can deliver to your lender your paystubs, W2′s, bank statements, and/or tax returns. Second, how fast you can get the title work, the inspection, the survey and the appraisal ordered. Third, what lender you are using, and fourth, whether or not you are using downpayment assistance.

Here you will learn how to speed up the process to even close in two weeks in our Houston Real Estate market.

Obviously you can control the first step. When it comes to the second step, it is important that your REALTOR is on top of the transaction deadlines, schedules inspections immediately, evaluates whether or not you need a new survey, requests title work from the title company, and once inspection repairs have been agreed, proceed to request the appraisal. Then follow up with the title company to check if they have the seller’s payoff information, follow-up with the seller’s agreed repairs, schedules a walk-through final inspection before closing, understand what is the lender’s underwriter’s turn around time, makes sure that the lender’s conditions are being met, and how long the title company needs to produce the closing documents.

In regards to the third condition, here is where you want to be very informed who you use as a lender. For one thing, some foreclosures will only accept your offer if you have been pre-qualified thru their own system. You are not obligated to use them as your lender but you must pre-qualify with them.

When it comes to regular, nationwide banks they are now taking  an average of 45 days in to close on a transaction due to the large number of applications they receive, and more time if they ask you for additional documentation at the last minute.

Another option you can use is Houston Mortgage Company. They meet the direct endorsement requirements, have local underwriting, and are more knowleadgeable about our local Houston Real Estate market to evaluate your files more quickly. Your Houston REALTOR will know who to recommend among the many available locally.

Fourth, when it comes to downpayment assistance, you have to use an approved list of participating lenders in the Houston metropolitan area. But even so, not all lenders all completely familiar with all the process. They may have received training but processed very few downpayment assisted loans by themselves.

Throughout our experience in the Houston Real Estate market, we have identified few lenders who are not only knowledgable about the process but who also close in a timely manner. We have been able to close a loan with downpayment assistance as fast as two weeks.

Finally, it all depends on how fast you turn in your documents, what mortgage company you choose, what loan officer is in charge, and how close your Realtor works with the lender, and how close the Realtor follows with up your transaction.

By living on the information age there is so much information available to us at the reach of our fingertips. Whenever we need to know anything, we just google it, and there it is. It makes us feel good when we become an expert on any subject in Real Estate.

As a professional Houston REALTOR, I am always marveled about the topic of home values as mentioned by my friends and clients. The number one website mentioned is Zillow, and I have to admit it is a wonderful website, and I like it a lot but when it comes to Houston Real Estate values, we need to be cautious about those values.

For instance, if you or friend have recently sold a house in Houston in the last three months and you compare the sales price with the value calculated by Zillow, you will see how accurate or innacurate it was.

Just give your Houston REALTOR a call and ask him or her at what price your friend’s house “closed,” and you will have a better idea of the accuracy of that information.

Finally, there is absolutely no way that Zillow or Trulia can account for individual homeowner upgrades -or deferred maintenance- or for the marketing expertise of the Houston listing agent that increases or decreases the sales value. But more importantly, these national websites do not have access to the private recorded sales information as recorded by every listing agent inn the Houston MLS at the closing of the sale. And that is true market value.