Kings County, NY has approximately 9,675 properties that have lis pendens filed against them according to RealtyTrac.com. This means that the owners of these properties are in default on their mortgages. Many of the properties will end up at Kings County foreclosure auction sales. In fact, there are approximately 54 foreclosure sales currently in the area and 237 bank owned REO properties available as well. Investors and buyers who are looking for bargains can find their pot of gold at Kings County foreclosure sales.
What You Should Know?
Foreclosure auctions are perfect opportunities for you to pick up a bargain. However, buying a property at an auction may not be for everyone. If you are new to the investment arena, you may want to bring an experienced person with you who has bid at real estate auctions before. The reason is the auctions go fast. If you are not familiar with the process, you could miss a good opportunity or worse- pay too much for a property.
Here are a few tips for the novice as well as the seasoned investor/buyer:
- Do your due diligence homework first. This means checking property prices, conducting title searches, looking for liens on the property, inspecting the property if allowed, driving by the property to get an idea if it is vacant or not and making sure your understand the New York foreclosure laws. You may want to speak with a New York real estate foreclosure attorney so that you are fully aware of how foreclosures work in the state.
- Set a budget and stick with it. Don’t get caught up on the excitement of bidding and overpay for a property. Even though the properties are offered at discounted prices, you still need to educate yourself about the current market.
- Have your cash available. Auctions require cash payments.
- Make sure you understand the bidding rules and register early.
Auction vs. REO or Short Sale
Besides purchasing homes at Kings County foreclosure auctions, there are opportunities to purchase discounted homes from banks that have REO inventory. REO’s are offered for sale through local Realtors. By contacting the listing agent or having your own buyer’s agent contact the listing agent, you can view and submit an offer on a REO property. It may take a week or so to hear back from the bank. REO’s are also sold in an as is condition like auction properties, but sometimes banks fix the properties up before they put them on the market for sale. You can always have an inspection and ask for repairs. The worst scenario is the bank refuses. Just keep in mind that REO’s are generally in poor condition and need repairs so budget the repairs into your offer. Title insurance is also available on REO’s and short sales. With a REO or short sale, you don’t have to worry about evicting the owner or tenant, because all properties are delivered vacant.
Short sales are still owned by the existing homeowner, but are heading to foreclosure. They are considered pre-foreclosure properties because the owner may be in default or about to default on their loan, and they are upside down on their mortgage. Many homeowners lost a substantial amount of equity in their homes when the real estate bubble burst in 2007 so that is the primary reason so many are underwater on their mortgages today. Some can no longer afford their payments because their lost their jobs or their interest rate reset so high the payment is no longer affordable. These conditions have resulted in a large amount of short sale inventory. Short sales also sell below market value so they are considered good investment opportunities.
When making an offer on a short sale, you should offer cash if you can because most banks and sellers want to know upfront that you are able to close the transaction quickly once the seller’s bank makes up its mind to approve the sale. Unlike REO’s, there is no guarantee that your offer is going to be accepted by the seller’s bank. You could wait three months or longer before receiving a response so you should be patient. If you are lucky enough to get the offer accepted, then you know you have bought a property with built in equity. Whereas, REO’s may sit vacant a couple years without the bank properly maintaining the home, short sales are frequently in better condition because they are usually occupied by the owner or a tenant who is maintaining the property.
Undoubtedly, now is one of the best opportunities to purchase a Kings County foreclosure property. Investors/buyers are encouraged to find their treasures while the hunting is still good. While the market is rebounding slowly, there are still a number of owners who are in default creating additional opportunities in the future for foreclosure sales. However, since no one can guarantee how long these trends will continue, smart investors are purchasing Kings County foreclosed homes now. For this reason, you should jump on the bandwagon now as well to take advantage of the affordable prices and wide selection of home choices in all price ranges.