The LouisvilleMarket.com Louisville KY Real Estate Blog

No matter what you are purchasing, you always want to be an informed buyer.  Here is the short list of 10 things you need to know before purchasing your next foreclosure as an owner-occupant.  The list is a little different for investors who are making a short-term investment.

1. Special Financing options
HUD, Fannie Mae and Freddie Mac all offer various financing options.  Some are for a limited time and most only apply to people that are going to live in the home.  For example, HUD offers a $100 down payment program and allows for small repairs that are needed for insurability to be escrowed if they total less than $5000.

2. Reserve Bidding Periods
Government foreclosures currently have a restricted bidding period where only owner-occupants can bid on the home.  This weighs heavily to your advantage if you make your offer quickly because you aren't competing against multiple investors who also see the equity in the home.  This period is from 10-30 days depending on the listing.  Ask your Realtor for details.

3. You MUST Be Pre-Approved
Don't wait to find the deal of the century and then talk to a lender.  You must have your pre-approval or proof of funds to submit with your offer.  Make sure it matches the names that will be on the offer, is written on bank letterhead (not just an email) and is dated within 30 days of the offer.  Most people get the pre-approval and then call the lender when they are ready to make an offer to get a new letter with the specific address, current date and offered amount.  You will lose if you wait because often these offers are submitted on the weekend when it is harder to get a loan officer on the phone.

4. Know the Property Requirements to get Your Loan
FHA, VA, Rural Housing and Conventional loans all have different standards that they will accept for the condition of the property.  If a handrail is missing or the paint is flaking (houses built pre-1978) then FHA will insist on repairs before they will approve the loan.  If a panel box is missing a permit sticker VA may not approve the sale until it is remedied.  A missing piece of siding may be a problem for Rural funding.  Conventional loans may not care that a window is broken but FHA may not approve it until it is fixed.  The bottom line is that you need to know whether the house and loan are the right fit.

5. There Are Purchase-Renovation Loans
FHA offers a  203k loan that allows you finance needed repairs or desired upgrades through qualified contractors.  It is one closing but they escrow for funds and then inspect the work at required intervals.  This does not apply to structural improvements or additions.  Ask a loan officer for details.

6. You Have to Have Earnest Money
Most REO homes and government foreclosures require that you have a minimum of $500 turned over to the listing agent or the seller at the time the offer is made.  This money is forfeited should you fail to complete the contract outside of the parameters they have given in which it may be lawfully voided.  Most homes require $1000 even if you are using special financing like the $100 Down Payment through HUD.  This has to be certified funds for Freddie Mac, Fannie Mae and HUD and usually must be deposited within 2-3 days of acceptance. 

7. What Are the Neighbors Like
Talk to the neighbors and see what it is really like in the area.  Ask all the questions that the bank doesn't know the answer to like, "Did the previous owners ever talk about the basement flooding?" or "Do you know if they were still having trouble with the roof?".  It doesn't matter why the person lost the home and the person you are talking to may have been friends with the previous owner so NEVER say anything derogatory (besides, that's just mean).  When you buy a house, neighbors can help make it a "home".

8. Will The Bank Do Any Repairs
The short answer is "Most Won't".  You need to ask your Realtor about your particular seller.  In cases where the house has been on the market for a long time and the repair is necessary to get financing, they may give in to get it off the books.  You can always ask but keep in mind that they are not in the home improvement business.  Even if they do the repair you may not have a guarantee and it may not get done right because they are looking at dollars and cents and don't really care about quality.  Truly, the bank may not even know who does it since the Listing Agent may be able to hire the contractor.

9. What is Your Lender's Closing Time
Most every foreclosure will have the phrase, "Time is of the essence".  What that means is that you MUST close the deal by the date on the contract or there is either a penalty (often as much as $300 for missing the deadline and then $50-$100 per day) or the seller can cancel the contract.  Make sure that your lender knows this is the case and hold them accountable for what they tell you.  Likewise, don't wait a day or two to get them the documents that they need.  The time rolls around rather quickly and those delays really add up.

10. Do You Have An "Out"
Ask your Realtor what your options are if you decide not to buy.  Some banks have an iron-clad "As-Is" policy that you will lose your deposit if you back out at any time after acceptance.  Others give you a 10 day inspection period.  Some government foreclosures insist that they get a copy of the inspection report and have a right to remedy the problem if something previously unknown is discovered.  You should know all of this before signing a contract.

Here's a free bonus:

11. Your Board Contract Probably Doesn't Mean Anything
When you make an offer in Louisville on an REO (real estate owned), your Realtor will have you sign a Realtor board contract.  In most cases, this won't amount to much because the banks, HUD, Freddie Mac and Fannie Mae all use their own addendum that effectively nullifies your initial contract.  They do this because they are operating all over the US and have to handle these in mass, so they don't have time to look for the fine print or have an attorney review the details.  Instead they take very little information from your offer like the date, buyers, purchase price and earnest money and the closing date.  Everything else they put into their own terms and have you agree to those.  Review their addendums carefully!  Freddie Mac requires all buyers to pay a "Re-Key Fee" ($120) and pay an additional fee if you don't use their title company.  They don't waive these fees so be sure you know what they are and agree to them.

Thanks for reading and we appreciate your comments and sharing!...

The new Obama Healtcare Act that will take effect in 2013 could impact how you sell a house in Louisville, Kentucky. 

Louisville home sales could have seller's feeling an additional pinch when they could be taxed an additional 3.8% on top whatever capital gains tax they are liable for.  Obamacare enthusiasts have talked down the widespread impact by focusing on the limited number of people that are effected by this additional tax.  However, it has to be agreed that the housing market is driving the economic recovery train and anything that is combating this recovery can not be spun to make it a good idea.

An additional consideration is that the starting date is after the election.  This has to be used to an advantage to prevent this from happening.  As it is, most Americans will not realize what is coming until it is already here.

Homeowners in Louisville need to be aware of what impact their nestegg....

With just 2 days left until Christmas, we are all watching and waiting for Santa.  Here is a link where you can see the reindeer as they get ready for their legendary ride on Christmas Eve.  Santa feeds the reindeer at 10am and 5pm EST!

www.reindeercam.com

Merry Christmas from the Atteberry's and www.LouisvilleMarket.com...

First-time buyers of real estate in Louisville, Kentucky will have an unwelcomed surprise in 2012.  The two-month extension of the federal payroll tax cut is being funded in part by new homebuyers and existing homeowners who refinance beginning in January of the new year.  The PMI or Private Mortgage Insurance premium that most buyers pay when financing their home through Fannie Mae, Freddie Mac or FHA, is increasing to .4%, a rise of .1%.  The increase will reflect as an average of about $8.50 a month for a purchase of a $100,000 home.  This covers the roughly $33 billion dollar price tag attached to the social security tax cut.

Author's Note
It's interesting to consider that the "tax cut" to save the American citizens' hard earned money is going to be "funded" by taxing their largest asset instead.  At some point will Congress recognize that we would rather them learn how to NOT SPEND money rather than shuffling WHAT they are taxing?  Whether they take it from my check or make me send it with my mortgage payment, either way, I'm still paying it and they still got it.   
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WHAT DO I NEED TO KNOW BEFORE I BUY A FORECLOSURE?

The first thing I would tell you is that this article can only give you a general game plan.  Each bank is different and every Asset Manager is different.  For the purpose of this article, we ARE NOT referring to HUD homes. 

Foreclosures can be some awesome deals but before you run out and get a couple you need to understand a few basic things. 
1. People facing foreclosure are often an emotional wreck...this is usually taken out on the drywall.  Expect holes in the doors and walls.
2. The person being foreclosed on still owns the property until the gavel drops at the auction. Technically, they can strip the home and it isn't illegal although there could be a civil penalty as outlined in the mortgage.
3. People that aren't able to make their mortgage payments can't usually make major home repairs either.
4. Foreclosure is often a symptom of a larger issue...Sickness, unemployment, divorce, overall poor financial planning, death.

The point to all of this is that the homes are often very rough and neglicted, both before and after the foreclosure.  Banks often don't want to spend the few dollars to keep the power on and that often causes basements to flood because the sump pump can't function. 

Without a Rehab Loan, FHA Doesn't Usually Finance These Deals
Whether a home is eligible for FHA is based on the home itself, not the fact that it was a foreclosure.  Because of this, you should ask your agent what financing could work with a particular home.  DO NOT assume that because you were pre-approved, it means you can buy any home in that price range.  Remember that another bank just took a drastic loss because of its current condition.  The next lender does not want to go through the same trouble.  If you need to finance the rehab costs into your mortgage, you will need to obtain a builders or investors loan or you will need a 203k loan which is a purchase and renovation loan offered through FHA.  Anyone approved for an FHA loan can obtain a 203k loan.  The debt ratio factor is based off the amount borrowed for both the purchase and the repairs.  The appraisal is based off the value of the home after repairs are completed.

THE OFFER
Normally, I write as many loopholes as I can into a contract to get my buyer out unscathed should they decide it isn't the right house for them.  Foreclosures are a different animal.  You should be familiar with homes and their structure or have someone experienced with you.  You will have time for an inspection if needed, but you want a fairly good idea of the repair costs involved to get the home liveable.  Know what the home is worth as it sits, what it will be worth fixed up and the cost it will take to get it there. 

HOW LOW WILL THEY GO
Obviously, the bank wants the deal MOST LIKELY TO BE COMPLETED. If you have a full price offer that is based on you getting FHA approval and the Seller also has an offer for a few thousand less that is all cash with no contigencies, they could choose the cash deal.  You have to be able to show them you can move QUICK with your offer and that you are less likely to back out because of a contractual issue.  I recently had a deal that was discounted 55% because my investor was an all-cash buyer that could close in 10 days.

WHAT TO BRING
Make sure that you have a check for $500-$1000 for the earnest money.  Some want up to 10% on cash offers.  Some want a cashiers check or money order.  Ask your Realtor what to bring.  You will also need your pre-approval letter or verification of funds (bank statement).  Some Sellers also make you call their loan department to get pre-approved.  You may still use who you want, but they want to know you have the ability to close.

THE WAITING GAME
Those words in every listing "May take several days for a response" aren't just words.  It is the banks way of holding out for additional offers.  Once a Seller gets another offer, they play the horrible, horrible game of HIGHEST AND BEST.  You don't know what the other offer is, only that there is someone who also wants the home you looked at.  You submit your Highest and Best offer and the Seller takes it from there.  Realize that the Highest and the Best may not be one in the same.

IT MEANS NOTHING
Once they give you the verbal acceptance, realize you still don't have a deal until the signed document is received.  They will most always send an Addendum that nullifies the original contract.  They do this so they can operate in multiple states without worrying about a "gotcha" clause in the contract.  They fill out their attorney-approved addendum and have you sign off on it.

CLOSING
Failure to close on time may mean forfeiting the deal or a substantial penalty.  Close when you say you will or there will be a cost.

To Search for all the foreclosures in Louisville KY go to www.LouisvilleMarket.com and contact Mark Atteberry and Paula Atteberry, foreclosure experts.

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The Louisville Training School for Boys
The Louisville Training School for Boys opened in 1889 on property that is now 4571 S 3rd Street, Louisville, KY 40214.  The school and boarding house were mirror images with both having a porch that extended down one side of the structure.  It was at this school that boys prepared for service and often the graduates would go on to attend at West Point, enlisting as officers.



The school offered a variety of studies including greek and german, freehand drawing and geometry.  The cost of enrollment in 1904 was $100 for a 10 month school year with 1/2 being paid at the time of enrollment.  A student could earn a $50 scholarship for the following year by being the best in his class and not having a grade below 75 on any exams.

The Louisville Training School was on the left and the students would live in the home on the right, currently 4571 South Third Street.  During the early 1900's this had the address of 4553 S 3rd Ave.  There were no other homes on the block on this side of the street and the cadets used the open fields for baseball, basketball, football and track.

 

 

In the early 1920's the main school building suffered a massive fire that burned it to the ground.  The boarding quarters for the cadets still stands much as it did in the 1800's with some cosmetic updates.

 

As of November 14, 2011, this home is currently for sale and listed by Mark Atteberry, SG Priest Realtors.  Additional information can be found by clickingLouisville Historic Homes....

 

This fantastic home sits on a double lot in Beechmont, situated between Beechmont Baptist Church to the west and the Beechmont Community Center to the east.  With almost 2500 square feet, this 110+ year old 2 story home has 5 bedrooms, 5 exterior doors (front, side, rear, upstairs and basement exits), 2 full baths and a sunroom.  There are a lot of updates including the siding, both bathrooms, HVAC and gas lines as well as interior walls and ceilings.  The outside has a 700+ square foot wrap around porch where you can have your morning coffee and watch the squirrels and birds.  It is a mechanics dream with the oversized 2+ car garage with another 725 sf loft upstairs! There are dogwoods, black walnut and cottonwood trees on this double lot.  This is a fixer-upper but one that will pay off in the end.  Just minutes from UofL, Churchhill Downs, Iroquois Park, hiking, biking and equestrian paths with a kids park just out the back door!

For more information click here.
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HUGE PRICE REDUCTION
This outstanding traditional home sits on 1.07 acres in Simpsonville, Kentucky at 1948 Todds Point Rd. The price was just dropped to only $335,000, a discount of almost $50,000!  As you walk in the front door, you are met with all the charm and warmth of the foyer with ascending staircase.  Off to the left is the formal dining room with faux finishes and the right leads into the gorgeous, oversized living room with fireplace. 

The upstairs has a nice landing as well as being host of the 4 wonderful bedrooms.  The master bedroom is complete with a California Closet typical in homes twice this price.  The MASSIVE custom designed master bath has separate shower and tub and dual vanities.  You have to see all the pics of this great house!

The finished basement has plenty of room for entertainment with a glass block bar, built in entertainment center and extra finished room.  There is still over 300 square foot unfinished as well as exterior stairs. 

There is a quiet patio off the living room perfect for sitting in the morning, reading the paper and sipping your coffee.  The lot is nice and level with a small creek in the rear.  It backs up to a million dollar estate complete with horses nearby. 

In all, you will have over 4350 square foot of finished living space as well as the 2 car attached garage.  You will not be disappointed in this house!  Located in Shelby County with award winning schools, this is truly a place to call home.

For complete listing information visit the premier real estate web site for Simpsonville, Kentucky.

Mark & Paula Atteberry
SG Priest Realtors
502-224-1039
mark@LouisvilleMarket.com...

The Louisville Loop
The Louisville Loop will connect Louisville with over 100 miles of paved biking trails around the city.  Already named in the "Top 25 Bicycle-Friendly Cities" by Bicycle Magazine, Louisville improves on their image through this huge undertaking.  The first phase is complete, connecting Waterfront Park 21 miles away to the Farnsley-Moreman Landing.  The trails can be used for pedestrians, equestrians and other non-motorized transit users.

Housing Impact
As Lower River, Upper River, the Northeast, Floyds Fork, Forest Pond Creek connect to Southwest Louisville the homes close to the trail will be certainly increase in value and could make some of the northwest areas more desireable, attracting a new influx of people and revitalizing that area as well.

Louisville has long been known as the City of Parks and has become a healthier city as we have prioritized bike lanes going into downtown, caring for our existing parks like Iroquois and Cherokee as well as the Waterfront Development.  Relocating to Louisville has become the right choice for many families in the last decade and could be the right decision for you as well.  Search all the homes in the Louisville area and then call Mark & Paula Atteberry at 502-224-1039 to schedule your personal showings.




 

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Paying Your Bill
Each year, residents are sent a tax bill notice via mail to either the property address or another address if noted at the time of closing your house.  The property owner is responsible for ensuring that the bill is paid, though many property owners have the amount held in escrow throughout the year and the mortgage company will actually remit the funds.  If the name of your mortgage company appears on the bill you can assume that they will make payment or call them if you are unsure.



If you are paying the bill yourself, make your check or money order payable to: Jefferson County Sheriff's Office.  Include the Property ID number shown on your bill.

The schedule at the top right of the tax bill explains that you receive a 2% discount when paying by December 1st.  Paying the bill by December 31st is the full amount but no penalty.  After the end of the year but before January 31st there is a 5% and from February 1st through April 15th there is a penalty of 10% + 10%.  In the example above, the difference between paying by December 1st and April 15th is the difference of paying $2053.70 and $2535.70.  That's a BIG difference!

Many mortgage companies will set up your escrow to pay by December 31st unless you call the escrow company and let them know to remit by December 1st so you can get the 2% discount.

How Do I Make My Payment?
You can mail your payment with the detachable stub at the bottom to:
Jefferson County Sheriff's Office
PO Box 70300
Louisville, KY 40270-0300

or

Pay in person at the Sheriff's Office or ANY 5th/3rd Bank location in Jefferson County.  You MUST bring the tax bill with you!

or

Pay by credit card on the Sheriff's website.  You will be charged a convenience fee by the bank.  They won't give you a receipt so hang on to your cancelled check or money order stub. 

What If You Overpaid?
If you think you are entitled to a refund you should call the Sheriff's Office.  They may need additional documentation to process your refund.  It has been my experience that this process can be lengthy and not fun, so make sure you send in the exact amount owed.

What If You Bought or Sold the Property During the Year?
The seller usually pays a pro-rated tax during closing for the portion of the year they owned the property.  The buyer is then responsible for the entire amount when billed.  If you are in doubt, refer to your closing settlement statement.



What are Homestead and Disability Exemptions?
These exemptions reduce your taxable assessment.  The Homestead Exemption applies to people over 65 who own the home in which they live.  The disability exemption applies to people who are totally disabled and own the home in which they live.  This exempts the first $34,000 of the value from taxation.  If a home was valued at $75,000, you would only pay taxes on $41,000.

If you have additional questions, call the Sheriff's Office at 502-574-5479 or the Property Valuation Administrator's Office at 502-574-6380....

While the Obama administration has dealt with the economic downturn by spending the problem away with bank bailouts, tax credits and rebates, the situation has not changed for the better.  

Invest in Real Estate Tax Free
Real Estate investors hold many answers to the current market conditions in Louisville, Kentucky.  While stock portfolios are down for most and performing poorly for others, those with self-directed IRAs are able to control their destiny more closely while helping the local economy and stabilizing the market at the same time.

An investor with a Roth IRA can purchase, renovate and sell (or rent) the property of their choosing while reaping the profits TAX FREE.  They have the ability to buy a home quickly with the weight of a cash offer and stimulate the businesses around them when purchasing material and hiring labor.

Equity Trust is one of the few companies that offer a self-directed plan.  The buyer acts as trustee to the fund and actually has no ownership--the plan is the true owner of the house.  The repairs should be paid for from the plan and the proceeds from a sale would be sent directly to the Roth IRA.  All of this allows the profits to be free from tax.

Those who renovated to rent also benefit as the rents collected that are paid directly from the tenant to the Roth IRA would also be tax free.  All of this has restrictions and limitations and you should consult your tax advisor before beginning.

Real Estate Investors Build America
While some blame real estate investors for the inflated prices of 2000-2005 it simply isn't the case.  Those who flip houses built struggling neighborhoods then-- and can do the same thing now.  If an investor buys a property for $50,000, renovates it for $20,000 and markets the property for $100,000 he not only made a great profit for his efforts but also stabilized that neighborhood in a real way.  Either the house is worth $100,000 and appraises for such or it doesn't and the investor would most likely lower his price to that of the actual worth. 

Federal Neighborhood Stabilization Program
When the government subsidizes neighborhood stabilization with grants up to $50,000 for a $100,000 house it is again an illusion of recovery.  The tax role shows the home increased, the sales records show the increase and the Realtor is paid as though he sold a home worth $100,000 but the truth is that the home was not even offered on the open market to see its true value.  Homes bought with NSP dollars (Federal Neighborhood Stabilization Program dollars must be sold to those who use the grant funds to purchase).  I encourage clients to use these programs if they are available to them but that does not mean that the programs are effective in doing what they intended to do or that it is fiscally sound or economically transparent.

Freddie Mac & Fannie Mae Deed Restrictions Impede Economy
By letting investors buy Freddie Mac or Fannie Mae homes without deed restrictions, it would stimulate the market further and encourage more professional builders and remodelers to enter this forum building better products, controlling costs and preserving jobs.  Currently, Freddie Mac and Fannie Mae have a 3 month deed restriction that investors are required to sign before their offer is accepted, stating that they cannot resell the property within that time for more than a 10% profit.  While this discourages flips without renovation it also stimies those who are willing to quickly improve properties and forces the prices higher because they have to recover additional holding costs.  Further, it ties up an investors funds or funding for 3 months at a time making it harder to move to the next deal because they are waiting out the clock so a real profit can be achieved.  As a result, some investors will shy from them and simply chase the bank REO foreclosures.  They rarely have owner occupant restricted bidding periods or the deed restrictions that weigh on the government foreclosures.

Investing in foreclosures in Louisville Kentucky can be very rewarding.  When looking to buy a foreclosure, HUD home, bank REO, short sale or other distressed property, you will want to chose a knowledgeable Realtor who is very experienced in these transactions.  Some make the mistake of calling the listing agent thinking they will get an inside track.  The truth is, they are under much scrutiny for every submitted offer and have know that other agents will call "foul" if they feel they were treated unfairly. Mark Atteberry work with real estate investors finding foreclosures in Kentucky and uses his experience as an expert buyers agent to negotiate the best acceptable offer at the lowest price and favorable terms.  Because Mark only works for the Buyer and not the bank, he protects the integrity of the deal and the interest of the investor.  You can start your own search forforeclosure properties in Louisville, Shepherdsville, Simpsonville, Shelbyville, Bardstown, LaGrange, Crestwood, PRP, Valley Station, Middletown, Peewee Valley, Shively and other areas close to the Louisville market by clicking here. 

You can contact Mark Atteberry by email or call 502-224-1039....

When you buy a home in Louisville, Kentucky you are getting a hi-tech city that cares.  The new age has simplified what some cities have as a cumbersome process of calling and complaining and being transferred from one department to another into a quick downloadable app to a smart phone, taking a picture of the problem or infraction and with a couple quick clicks the program will map (geocode) the location and send the report directly to Metro Government's MetroCall 311 center. 

Now residents can interact with the city in person, by phone, on the web, through Facebook or Twitter and now smart phone.  The app is another example of innovation at work in Louisville.

For the iPhone app, click here.  For the Android download visit the marketplace on your device and download for free.

If you need to search to buy a home in Louisville, Kentucky visit www.LouisvilleMarket.com or click for a customized search.

Mark & Paula Atteberry
www.LouisvilleMarket.com...

Code Red has been unveiled by the mayor's office as their new citywide emergency alert system.  This is the best way to keep informed during an emergency.  People who buy a home in Louisville can receive text alerts, emails or phone calls to notify them of a gas leak, tornado, severe weather or other major emergencies in their part of town.

To sign up for the alerts, click here.  To search for a home in Louisville, Kentucky click here.

Mark & Paula Atteberry
www.LouisvilleMarket.com


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New legislation has been introduced by California Congresswoman Susan Davis that would require banks to disclose to the public the lowest acceptable price for a short sale.  The belief would be that it would expedite the process and give homeowners the opportunity to sell their home before it goes to foreclosure.  The law would only effect Fannie Mae and Freddie Mac loans.

Since the current process is cumbersome and lengthy, it could encourage more people to try purchasing a short sale because a major obstacle is a prolonged waiting period, 4-6 months is not uncommon, before knowing whether or not the foreclosing lender will counter the offered purchase price.

While some lenders disagree with the new bill, it could actually drive up prices through receiving multiple offers.  Banks have already found this to be true with lower-than-market-priced foreclosures drawing upwards of 10-15 bids and the bank requesting everyone's highest and best offer which in some cases has been $25,000 or more over the list price.

If this is handled properly it could do more to impact the market than all the tax rebates combined.  If handled improperly, stubborn or disgruntled banks could take a firm stand on their bottom line even if it is unreasonable and out of line with market values for their current condition....

A new bipartisan bill has been introduced to help bail out some of the worst real estate markets in the country.  While it applys to the whold nation, California, Florida, Colorado, New York and Hawaii stand to win the most with this proposal.  The bill allows foreigners who spend at least $250,000 on  their primary residence and a total of $500,000 or more on residential property to obtain a renewable 3 year visa.  The additional properties can be rented out.

Unlike other programs that failed in its effort to stimulate the market or did so with too high of a cost, this stipulates that the foreign investors must pay cash for the property at a price higher that the most recent appraised value, live in the U.S. for 180 days a year, pay U.S. taxes on foreign earnings and neither the buyer nor their dependents would be eligible for Medicare, Medicaid or Social Security benefits.  Additionally, they would have to have a work visa to hold a job.

The bill in its current form does not lead to citizenship.  In a separate initiative, foreigners could "fast track" a green card by investing at least $500,000 in an American buiness that creates 10 or more jobs.

Mark Atteberry
www.LouisvilleMarket.com

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When buying a foreclosure in Louisville, KY, homebuyers that are willing to live in the property they buy have an advantage over investors bidding on homes.  Fannie Mae, Freddie Mac and HUD all have programs that cater to the owner occupants giving them 10-30 days to bid on the property before allowing investors a chance at them.

Fannie and Freddie have a First Look Initiative that checks off the first 15 days the property is listed on their sites, www.homesteps.com or www.homepath.com.  During that period, only persons that are going to live in the property may submit a bid.  This allows buyers to compete on a more level playing field because investors are often dealing with cash and especially first time buyers will most likely be financing the house. 

HUD takes this a different step in each direction.  If the house is insurable for a new FHA mortgage, they will allow the first 30 days to be restricted to owner-occupants and non-profits/public entities (who can also bid in the first 15 days on Freddie and Fannie).  If the house cannot be insured for a new government-backed mortgage, they will only give owner-occupants the first 10 days of exclusive bidding.  You can find out the status on www.HudHomeStore.com by entering the case # found on the MLS listing.

Buyers should be aware that their key hurdle to buying a foreclosure is obtaining financing.  Many foreclosures won't qualify for traditional mortgages, but some do.  Working with a knowledgeable Realtor who can help navigate the process, knowing what may or may not pass muster, will make all the difference when dealing with a challenging situation like buying a government owned home.  Mark & Paula Atteberry help buyers recognize, analyze, purchase and renovate their properties.  Sign up for Property Tracker and get daily updates on all the foreclosures or short sales in the Louisville Market.

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Move in time for the holidays! This fantastic renovation NEEDS NOTHING. Unpack and unwind in this 3 or 4 bedroom, 1 1/2 bath brick ranch with basement in Sherwood Forest. The oversized garage is big and roomy with a great backyard that kids would love. There are a ton of updates including REFINISHED HARDWOOD FLOORS, new roof (house & garage), fresh paint, water lines & ceramic kitchen floor, countertop & sink, furnace, AC (will be installed prior to inspection), and more! Close to everything -- schools, malls, expressways, GE and Ford but tucked away in the neighborhood, this house has everything you want and affordably priced PLUS this home now qualifies for two Special Financing Options with as little as $500 down or 3.99% interest!  Email mark@LouisvilleMarket.com for all the details on this great house!

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HOW MUCH DO I OFFER WHEN MAKING A BID ON A FORECLOSURE PROPERTY?

This is one of the most difficult things to gauge but this guide should help discect the problem for you.

1.  How long how the home been on the market?
Even in this market, good homes go quick.  If it is aggressively priced and in a good neighborhood don't plan on it sticking around too long.  The banks (and especially HUD, Freddie Mac and Fannie Mae) are putting them out there at reduced prices IN HOPES of getting multiple offers.  This is what I call their evil little game of Highest and Best.  Homes that just hit the market have the possibility of selling for ABOVE the list price.  Think outside the box on this...if the home is $90k in a $150k-$200k neighborhood, don't think the bidding stops at $90k. 


2.  How long has it been since the last price reduction? 
REO homes can see reductions every 30 days or sometimes even more frequently than that.  Price reductions stir interest.  It gets them flagged on certain websites as being recently reduced and everyone getting my automated listing emails will see it again as having a price reduction.  If you are looking at a home that hasn't seen a reduction in a while, you may be in a position to offer substatially less.  THE BANK DOESN'T KNOW WHAT PRICE WILL GET IT SOLD, ONLY WHAT PRICE WON'T.


3.  Was the last price reduction drastic or nominal?
If you see a drastic price reduction, it could mean they are wanting to move it quick, price it well under value and again, hope that there are multiple bidders to drive the price back up.  I have seen this played out time and again.  One home in Cloverleaf had 50+ phone calls the first day on the market.  Another on Sky Blue had 14 offers with only 2 at or below the list price.  It is by design. 

If the price changes are nominal, they are just trying to stir the pot and generate interest.  You may be able to offer less and still get it.

4.  Are you in a restricted bid time frame?
HUD, Freddie, Fannie and some banks have restricted time frames where they will only allow owner-occupants, government agencies and non-profits bid on a home for the first x amount of days (it is different for all the agencies).  If you are in one of the restricted periods and you qualify to purchase the home (ie. you are going to live there), you may be able to bid less than an investor would and still win the property.  You want to bid correctly though and stay within their range.  If you get countered or rejected, you may allow other investor bidders in and drive up the price.


5.  Are there any other bidders?
This is one of the most important questions...and sometimes the toughest to answer.  If there are, you are going to have to carefully gauge your competition and answer the next few questions.  With HUD, the bidding is auction-style...no second chances once someone gives the highest acceptable bid.  Everyone else USUALLY gives a counter for everyone's highest and best offer.

If the house has been off the market and recently (within a day or two) put back on the market (ie. deal fell through), this is one of your best opportunities provided you are in a position to close quickly and have no hiccups in the process.  You have to look REALLY good on paper.  The seller is usually frustrated, the list agent may be frustrated and everyone involved is usually looking for SOMEONE who can close rather than scraping the last nickel out of the deal.

6.  What is the home worth?
You have to know your numbers on this one.  What are the values in the neighborhood.  What kind of work does the target home need?  Are there any unknown, potentially big expenses (furnace, foundation, AC, roof)?  You want to take a good look at these.  There may be a way to be released from the contract if any of these items show up on an inspection, but rarely do they want to go back and renegotiate the price based on what you find.  You have to make the right offer with these in mind so you don't end up overpaying if they are present and you want the house anyway.


7.  What is the home worth to you?
This is the most important question of all.  I have a phrase that my investors hear from me a lot, "Pigs get fed, Hogs get slaughtered".  The other phrase goes hand-in-hand, "Its only Equity if YOU own it".  It doesn't matter how good of a deal it is, if you don't bid enough to seal the deal, it will always be a "itkudabin" (itkudabin a good deal if we had bid a little more).  Think carefully about what it is worth to you and how much equity you need to make it worth your time and energy.  Once you have your number, there are never any regrets because you know that if you had bid more, you would have been going outside your plan.  NO REGRETS.


Remember:  Deals come along everyday...Some are found and some are made.  Make a great deal!...