HomePlumbing TipsBuying first house at 23; foreclosure, HUD, any tips?
Posted in Plumbing Tips on 19th May 2014

Buying first house at 23; foreclosure, HUD, any tips?
Hello, we are going to be buying our first house at 23. We are both completely ignorant to the process. This is what I have gathered so far:

1) Get pre-approved. Will this give us the option to obtain the mortgage with whoever we want or will he be locked into one lender? How likely is this pre-approval to get “readjusted” as we go on?

2) Look for houses. What is the difference between buying regular, HUD, foreclosed, or short sale homes? We live in an area where almost every house for sale is a short sale or foreclosed; does this affect us? What should we avoid?

3) Hire an inspector. If there are any issues with the house (electrical, plumbing, etc) is it the current owner’s job to fix it or we simply decide if we want to take the risk of buying a house with problems? Of course, we would prefer to buy a house that has a clean inspection, but I don’t know how specific these inspections get.

4) Should we have a realtor? How does this work?

Sorry if these questions are too broad or seem redundant, but I want to make sure this is done right. We have good credit, no blemishes, and make good, steady money (and have for the last 1.5 years since we moved to the area).
Sounds like it’s better to stay away from foreclosures, short sales, etc. What about HUD? And is there any recourse if the inspector doesn’t find or note something, so we buy the house, then find out about the problem after the fact?
@ “Noodle:” Emphasis on “Renting” lol

Best answer(s):

Answer by Ryan M
1) You are NEVER locked into one lender until you sign the papers to buy a house. Since it is called a “pre-approval” and not an actual approval, of course this can change as the lender validates the information that is provided.

2) The process for getting an offer accepted for a short sale or foreclosure is measured in MONTHS, not days as with a traditional sale. So you can put in an offer in June and not hear another word until September…..or longer. You need to be aware of houses that are trashed by the former owners.

3) You can ASK the owner to fix any issues, but they are under no obligation to do so. Make sure you make your offer contingent on an inspection, so you can back out if you find something wrong. HOWEVER, when dealing with short sales and especially foreclosures…..expect almost nothing to get fixed.

4) YES YES YES

Edit: I would personally say that short sales are MUCH better than foreclosures (generally). You might find a great deal on one (I did). Foreclosures are often MUCH more scary. As for the inspection, this falls under the “Buyer Beware” doctrine. Houses are bought “As-is”. You are the one who hires the inspector, so if he misses something it is ultimately your fault since you hired him. HUD homes can be just as bad as forclosures…be leary of them.

Answer by spalmer
Ryan is correct. I would highly recommend that you either go to the library or purchase the book “Home Buying for Dummies” — it’s an excellent book and very informative. There are several other great books as well that will help you focus in on what you want and need, and that will give you the ‘ins’ and ‘outs’ of the whole process.

There’s always the chance that the inspector will miss something… in fact, if you hired 3 different inspectors, you’d get 3 different reports. Usually there’s a clause in their documents stating that they are not responsible. You are allowed to get a general inspection and/or specific inspections (i.e. roof, furnace, electrical, etc.). Just be aware that you’ll pay for all inspections you get. If there’s reason to be concerned about a specific item (i.e. the electrical or plumbing system), then it would be well worth it to get a specialist to inspect that area. You can always sue the inspector or seller, but you would have to prove that the problem existed when you purchased the home and that the seller/inspector knew about the issue and didn’t disclose the fact. Basically, be prepared that once you purchase, it’s your home and you’re responsible for anything that goes wrong.

Don’t be too freaked out by the inspections… even brand new homes often have a few items found on the inspection report. Look out for the big ticket items and items that cannot be repaired (or would be ridiculously expensive to repair) — those items mean run from the house (those first-time buyer books will help you figure out what to run from).

There are foreclosures that are in decent shape and a steal… but they’re few and far between. In my area, the foreclosures are in pretty crappy condition and really the price isn’t discounted much — obviously, this varies by area. Short sales and foreclosures can be a pain simply because of lack of negotiating room and length of time they take to close… and even to hear if an offer gets accepted. Be prepared for the home buying process to be stressful — it’s a lot of fun, but it’s pretty stressful as well. Good luck to you!

Answer by Use Your Noodle
When you get pre approved, that is with a particular lender. So, no, you cannot just go and use that pre approval with any bank. The pre approval comes from whatever lender you apply with and gives you the best terms.

Stay away from a short sale. They almost never close. They take months of wrangling and it can be a nightmare. If you have up to a year to wait to move into a short sale house, go for it. Just because a house is a foreclosure or HUD home it doesn’t mean you are going to get it for a bargain or steal. The bank wants to sell the property for fair market value. Some foreclosures are going to be sold AS IS and the bank will NOT fix things. That will be on you

Always hire your own inspector. When you write up an offer, you need to include a contingency in your contract that says this offer is contingent (dependent) upon what the inspection finds. If the inspector finds things that need attention, you can use this as a bargaining tool to go back to the seller and ask for them to make concessions. Either they come down in price more, or they get the item(s) fixed and re inspected. You would have to pay for the inspector though to come back out. If it is a repair or issue that is going to be really expensive or could cause you issues when you go to resell the place, you are better off walking away and finding another property.

YES! You should have a buyers agent. An agent costs you nothing! The seller pays the commissions due when selling a house. You need someone on your side to help you make the offer, know what other houses have sold for and to show you properties.

As an aside, I find it comical that your Top Contributor badge is in this category.. Renting and Real Estate . LOL

Know better? Leave your own answer in the comments!

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