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A Foreclosure Buyer's Success Story
By Daren Blomquist, RealtyTrac | Published: 2/29/2008
There's an upside to the foreclosure crisis, and it's this: some homebuyers are picking up great deals on foreclosures.
Jeremy Flanagan is one of those people who bought a foreclosed house at below-the-market price. The Fayetteville, Ark., man bought a newly built house for $13,500 under its appraisal. "It was in the zip code I was looking for, and it showed that the bank was owed much less than the house would appraise for," Flanagan said of his new home.
A bank had foreclosed on the property while it was under construction. The bank finished the home and then listed it for sale. Flanagan saw the for-sale sign and picked up a flier, but the price was out of range. Then he noticed the same property was also listed as a foreclosure, giving him a big advantage over other potential buyers.
"After finding the house listed on RealtyTrac, I approached the bank directly with the information provided and brought the price down $10,000," he said. "I used the amounts for the bank liens listed on RealtyTrac to let the bank know I had the figures on how much they had invested in the property. It helped me negotiate with a stronger position than if I didn't have that information."
Flanagan approached the foreclosing bank directly to negotiate a lower purchase price. It took two weeks to arrive at a price acceptable to both parties and close the deal. He found out in addition to the amount the bank lost on the foreclosed loan, it also sunk an additional $40,000 into finishing construction on the property. But even with that extra amount Flanagan knew he had room to submit an offer below the asking price.
Flanagan estimates his final purchase price was about 7 percent below full market value, a substantial bargain in this college town that is home to the University of Arkansas and located in the foothills of the Ozark Mountains. The home should retain strong resale value given that it's located in a city that was named one of the top 100 Best Places to Live by CNN Money Magazine in 2006 and has consistently ranked among the top 10 places for doing business in recent years, according to publications such as Forbes and Inc. magazines.
"In the past I had worried whether or not I had truly gotten a good deal on my home purchase. I know I got a great bargain on this one," he said, noting that this is his fourth home purchase. "I wish I had known about (the foreclosure market) sooner... I could have found deals like this with my earlier purchases."
GO TO: Part 1: Getting Started
GO TO: Part 2: Pre-Foreclosures
GO TO: Part 3: Foreclosure Auctions
GO TO: Part 4: Bank-Owned or REO Homes
GO TO: Foreclosure Guide
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