Banking on a good deal requires a little expertise, but the opportunities can be tremendous
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| Foreclosure expert Cody Farris says North Texas is still a strong market. PHOTO BY ARNOLD WAYNE JONES |
Next to bankruptcy, foreclosure is probably one of the scariest words in the economic lexicon.
Unless, of course, you’re on the other side of the foreclosure equation.
The holiday shopping season saw plenty of deep discounts and super sales on everything from electronics to designer clothing, and if you really did some research on which retailers had the very best prices, you could stretch your shopping dollar. The same can be true of real estate.
Getting a good deal can elicit the same kind of euphoric feelings one gets from a fine wine or a first kiss. And as with anything that makes you feel that good, bargains are also addictive. So why not apply those same principles toward a home purchase?
The stars are aligned for what could be the real estate sale of the century — if you know how to go about it.
To find the best deals, you need to enlist the help of an expert like Cody Farris, vice president of REO services for Prudential Texas Properties. In his 21 years in real estate, Farris has seen plenty of ups and downs. Even in Dallas, which has weathered the housing market crisis comparatively better than other cities, foreclosures are on the rise.
"We saw seen an increase of 10–30 percent in new foreclosures in 2008 versus one year earlier,depending on thearea," Farris says. "For example, southeastern Dallas had a bigger increase than North Dallas. Collin County continued to see increases."
Farris’ team sold more than 300 homes in 2008, most of which were bank-owned. But with this rise in foreclosures, the time is ideal for the purchase of one, if you know where to find the deals, and can meet the more stringent credit criteria to get one.
"If you can qualify for conventional financing," Farris stresses. "Most foreclosed homes will not qualify for FHA or VA financing due to the condition of the property. If a buyer has a reasonable down payment and good credit score, and focuses on properties that have been on the market a while, there are some buys to be found. The better properties, which haven’t been on the market for too long, are still selling within 5 percent of their list prices, which already takes into account any work the property might need."
The biggest pro in purchasing a foreclosure is that you’re working directly with a bank.
"They don’t have emotional ties to a property. It’s just business, so personalities don’t get involved," he says. There are also some additional considerations to be aware of when purchasing a foreclosed property.
"The banks usually require that the buyer sign the bank’s addendum, which outlines all of the ‘as is’ provisions of the contract, what type of deed will be delivered to the buyer, penalties if the buyer does not close on time and so on. It’s important to carefully read all paperwork, as you would expect with any contract."
That’s one of the main reasons it’s vital to have someone like Farris on your side to decipher the gritty details of the piles of mind-numbing documents that come with every home.
Buyers also need to be aware of exactly what could come with that "as is" disclaimer.
"Some of the properties need foundation work, a new roof or other expensive repairs, so a buyer needs to have the cash to do the repairs after closing, or a renovation loan where the improvements could be financed and ‘rolled into’ the purchase price," Farris says.
So what’s the best way to actually find the best foreclosure deals in the first place? Farris recommends engaging the services of a licensed Realtor, who will have access to the MLS and the most current foreclosure data available, making those purchasable lists that are advertised on the radio and TV seem unnecessary.
"I wouldn’t call the lists shady, just outdated," he says."You pay a fee to receive a list of properties that, in many cases, are already sold or have contracts on them."
Ultimately, it will take some due diligence and research with the help of industry professionals to find the truly good deals.
"The best thing is, the market has been much more stable in DFW than in other parts of the country. This isn’t Las Vegas or Miami. It’s Dallas, and it’s still a great place to buy or sell real estate."
Cody Farris, 214-405-1417. Dallashomesreo.com.
This article appeared in the Dallas Voice Defining Homes magazine March 6, 2009.