Foreclosures
How to use the Search tools to Find Foreclosures in Atlanta Georgia
Search tools are not perfect! In order to find foreclosures I have set these search buttons to find listings that have the word "foreclosure" or the phrase "bank owned" or the term "special addendums" used in the descriptions.
The use of the word Foreclosure in the description in any way is enough to get the property on my list. If the agent uses the term pre-foreclosure you will see it on my list. If the terms bank and owned are there you will see it on the list. I have added the search parameter for "Special Addendums" to help find some of the investment opportunities that may be "falling through the cracks". Some agents and Seller’s when selling foreclosures do not describe them with those words but virtually every one asks for special addendums. Once again there may be some listings on my list that use the words "special addendums" for something else, like a corporate transfer. Again, there will be some errors on the list, but there will be some hidden gems as well! Read the descriptions and you will find many foreclosures and a few corporate relo’s! To my way of thinking, anything that requires special addendums has the potential for being an investment opportunity,
Overview of Foreclosures in the Atlanta Area
Atlanta has a very large number of foreclosures every month. Perhaps it has to do with how easy it is to get credit these days. In this area the average consumer is pummeled with advertising to borrow, borrow, borrow and it is normal to see advertising for consumers to borrow up to 125% of the value of their home. Another factor that contributes to record levels of foreclosure is the increase of loan fraud, which has been rampant in the metro Atlanta area. For a wide variety of reasons there are literally thousands of homes that head down the slippery slope towards foreclosure every month in the greater metropolitan Atlanta GA area.
Some of these unfortunate homeowners manage to sell their homes in the final month before foreclosure. Investors circle like vultures and throw offers of cash and try to buy these homes for less than they are worth. But the problem is, that with the resale market not appreciating at great rates, and people borrowing more than the homes are worth, there frequently is not room for the investor to make a profit in the pre-foreclosure market, so the houses go the courthouse steps for auction!
When the home goes to auction on the courthouse steps (in the county courthouse in which it is located) it is sold to the highest bidder for cash. The home must be paid for in full, by the end of the business day. The lender has a representative there who bids what the lender is owed (in most cases) and that is where the bidding starts. Once again if there is not any equity left in the home it may or may not sell on the steps. Then the lender gets the home back with the secondary liens wiped clean. Typically in this area, the homes are then turned over to an asset management company. Asset management companies are independent third party companies that specialize in the process of evicting the former homeowner, and cleaning out the debris, changing the locks and figuring out what the home is worth. I am sure that there are some lending institutions that handle their own properties but in these days of outsourcing they are becoming fewer and further between.
Then the properties are normally listed with Real Estate Brokers and sold through the Multiple Listing Services. The banks and asset managers are charged with making the greatest return on their failed investments. Normally the Asset managers get three BPO’s (broker’s price opinions…kind of mini appraisals) and figure out the starting price from there. Some will list at the highest possible value and hold the properties on the market for 4-6 months and test the water, and some will list the property dramatically below the market and try to spark a bidding war for a quick sale.. Even the big players like HUD, Fannie Mae, the VA and Freddie Mac list their properties with Real Estate Brokers today. It helps insulate them from accusations of impropriety that might be caused by selling properties for less than their worth to insiders. Plus it is more outsourcing.
The Offer-Counter Offer Process in Buying a Foreclosure
There are no hard and fast rules about how offers are handled in the purchase and sale of foreclosures in the Atlanta market. In general after the properties are listed the Buyer’s agent prepares a contract on the GAR forms and submits an offer. Most of the Brokers that deal with foreclosures require some kind of proof of funds for all cash offers and pre-qualification letters for the the Buyers who will be getting loans for the purchase.
The properties are typically sold "as-is" and the Sellers will generally not provide a termite letter. The Listing agent will then present this offer to the Seller (the Assett manager). Sometimes if the offer is full price or better or if the property has been listed for more than a week or two, you might get a fairly quick response. But more often than not, the Seller will not respond quickly to offers below list price and will look for competing interest. When the Seller responds it is normally only to an offer that they are taking, and will come with a set of special addendums that must be filled out that are much more involved than the original contract. If there are multiple offers the Broker will usually give all Bidders a time to prepare their "highest and best" offer and will then respond only to the offer with the best terms.
The Sellers are generally are open to the Purchaser doing a normal home inspection and will typically provide utilities for that purpose. They make it clear that the Buyer can cancel if the inspection turns up major issues and reserves the right repair an item if they choose, but they do not generally do any repair. If the assett manager believes that the repair is beyond the scope of normal loans then they may only consider cash purchases.
You will see a lot of Sellers of the Foreclosures asking for the listing company to hold the Earnest Money, and requiring a fee for each day the contract is extended from the proposed closing date. The purchase of a foreclosure has some quirks, but it can be worth the effort.
Hud Homes
When an FHA loan goes into foreclosure and it does not sell on the courthouse steps, the lender has two choices.
* Keep the property and send it to an asset manager to sell on the open market.
* Collect on the Mortgage Insurance Policy that the original purchaser had bought with their FHA loan. HUD would then get the property back to sell again as a HUD HOME.
HUD lists its property on a website called BidSelect and they come on the market on Wednesdays and are open for bid until 11:59 pm on the following Sunday for owner occupant Purchasers. If they don’t sell by then they are open to investors or owner occupants until they sell. They are listed with Realtors and are in the MLS but this website is where you will see them first. I have keys and contracts and you can call my cell phone by dialing 770 HUD HOME if you want to see one. HUD does not sell the the general public, you have to bid through a registered agent, and it doesn’t cost you anything HUD pays the agents!
Fannie Mae Foreclosures
Fannie Mae was originally a Government Institution which became privatized in 1968 and now is a huge private corporation that makes loans and loan guarantees. They are fully qualified loans that are usually the lowest interest rates. When a property forecloses without someone buying it on the courthouse steps, the property goes back to Fannie Mae and is sold again through the assett managers and are listed in the Multiple Listing Services. A great number of the foreclosures in the Atlanta market are Fannie Mae Foreclosures. You can find them in the searches on this page.
Some Foreclosure Resources
Search for HUD Homes
Search Fannie Mae Foreclosures
Search Freddie Mac Foreclosures
Search VA Foreclosures
Enter Your Own Custom Search Here:
If you want to search for foreclosures by your own parameters click here!
Remember to enter the keywords: foreclosure, bank owned and addendums, to return more accurate results!
RE/MAX of Buckhead
DAN Connolly
404-370-0050
O. 404-233-4633
Fax: 404-370-0377