When the American real estate market went bust in 2008, the resulting foreclosure avalanche reached across the country, particularly in active housing markets such as Southern California. In Irvine, foreclosure listings and short sales, two options that banks use to lighten up their real estate-owned (REO) portfolios, were considerably numerous until about 2012, when the market started to recover. Nonetheless, prospective homebuyers may still run into foreclosures these days.
Purchasing a home affected by the foreclosure, delinquency, or deficiency process can have its financial advantages. However, if you’re looking at homes for sale in Irvine, CA, look out for the following red flags because they could turn into potential headaches.
1. Purchasing without Representation
Banks listing REO properties may suggest their real estate agents also represent buyers for additional savings. Similar to attorneys, real estate agents are directed to represent the interests of the individuals who retain them. For this reason, buyers should work with their own real estate agent in Irvine.
2. Mysterious Liens
It takes a few months of substantial legal work for a property to be listed as a foreclosure sale. During this time, creditors and plaintiffs may have attached liens to the property. Buyers who are planning to finance their purchase with a mortgage will get a title search and insurance through their banks, but they may also want to consider an owner’s policy just in case.
3. “As-Is” Property Conditions
Bargain prices are sometimes connected with “as-is” purchases, which means buyers will get a low price as long as no inspections are conducted. This could signal issues that are more significant than normal depreciation of the property. For buyers who are planning on completely rebuilding, this may not be a problem. Otherwise, it is not recommended.
4. Vandalism and Sabotage
Disgruntled homeowners sometimes vent their frustrations against their mortgage lenders in creative and destructive ways, which may include pouring concrete down the toilets or even introducing termites and other pests. In other cases, squatters may have occupied the property. Any signs of vandalism should prompt buyers to get home inspections.
5. Too Good to Be True
The loss mitigation and tolerance levels of banks will vary, but they rarely exceed the 25 percent mark. When foreclosed properties are listed for exorbitantly low prices, there may be more to the story than what can be seen from a surface point of view. This is when adequate real estate representation really pays off.
6. The Investment Bottom Line
To a certain extent, it can be assumed that all property owners are property investors, which means their purchases must make sense from a financial point of view. To this effect, the discount of a foreclosure listing should be justified in two ways: either the potential appreciation factor is attractive due to market conditions or the cost of maintenance and repairs can be afforded.
From Stonegate to Woodbridge, Irvine homes for sale are a great investment, though you’ll need to decide for yourself if you’re willing to consider foreclosures. Make sure you connect with a trusted local agent who can offer the advice you’re looking for. Reach out to OC Residential today at 714-454-6304.