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166 msWoods Distressed Homes for Sale

Looking for a bargain? Include foreclosures, HUD-owned, VA owned and bank-owned properties in your search. But be aware of potential pitfalls when purchasing this any of these types of property.

Here are a few things you’ll need to know before investing in any distressed property.

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Foreclosures

While it is possible to find good foreclosure opportunities, contrary to popular belief, most foreclosure sales begin with a list price that is more than what the property is worth. After all, the bank’s goal is to satisfy all liens against the property, recoup attorney fees and other costs associated with the foreclosure process, and make a profit. So the price is usually anything but a bargain.

Occasionally, there is enough equity left in the home to make purchasing a foreclosure a good investment, assuming everything else goes right.

Advantages
  • Possibility of finding a home with equity (rare)
Considerations & Concerns:
  • When you buy a foreclosure home you are getting the home in as-is condition. This means there could still be someone living there who has yet to move out or be evicted. And a lot can happen to a home in the meantime.
  • In addition to the primary mortgage (first lien), other outstanding liens can exist, from tax liens to second and third liens, mechanic’s liens, homeowner’s association (HOA) dues and more. You are inheriting these obligations.
  • Many banks will provide a pest inspection report if you ask for one. Your offer should be contingent on a home inspection.
  • If you are the winning bidder, then you will be required to pay the full bid by cashier’s check.

Bank-Owned Properties (a.k.a., REO)

When a property fails to sell at the foreclosure auction, it reverts back to the bank and becomes part of its real estate inventory. At this point, the primary mortgage is written-off as a loss, and the bank will negotiate with any remaining lien-holders and pay these off, in addition to any other HOA dues, mechanic’s liens, etc.

The first thing to realize about buying a bank-owned property is that the bank is never in a hurry to sell. Unlike an individual seller, there is no personal financial need to sell the home in a hurry. There is neither frustration nor desperation. Quite the contrary, the bank will act in a calculated fashion to maximize profit.

Advantages
  • Possibility exists to find a home below market value.
Considerations & Concerns:
  • Offers and counter-offers are almost never handled in-person, but instead via FAX, email or some other electronic means.
  • Don’t be surprised if the bank’s counter-offer is not what you hoped. The bank’s counter offer must show to shareholders and auditors that the bank made a good-faith attempt to get the maximum, fair-market price. Only when this is not possible will the bank entertain a lower price.
  • Be prepared to make several counter-offers before an acceptable price can be reached.
  • Ask to see any and all reports, such as homeowner’s inspection reports, pest inspection reports, etc.
  • You will want to have the home inspected and appraised, but this will be come at your own expense.
  • Can ask that the bank make needed repairs, although they generally have no interest in doing so.

HUD-Owned Properties (a.k.a., REO)

The main difference between a HUD-owned property and a bank-owned property is that you are dealing with the federal government and not a private bank. When someone defaults on an FHA-insured mortgage, the lender forecloses on the home and then files a mortgage insurance claim with HUD. HUD then pays the lender what is owed and takes ownership of the property. HUD’s goal is to recover the amount of the mortgage insurance claim, and hopefully get a fair market price for the home.

Advantages
  • Opportunity exists to purchase homes below market value
  • If the home meets FHA guidelines, qualified buyers may be able to purchase the home with an FHA-insured loan. Even if the home doesn’t meet FHA guidelines buyers may be still able to purchase it under FHA’s 203(k) Rehabilitation Loan program, which provides funds for the improvements in a single loan closing. The loan-to-value is based on the estimated future value of the home, with the repairs complete.
Considerations & Concerns:
  • HUD homes are sold as-is, and HUD will not pay to make any needed repairs. As with any home, buyers are strongly encouraged to have the home inspected and appraised.
  • Investors may bid on HUD-owned homes only after a period of time has elapsed, called the Exclusive Sales Period, at which point HUD will accept bids from all buyers, including investors.
  • Bids cannot be submitted directly by buyers. HUD uses private contractors, called “Marketing & Management Contractors” to manage its inventory. These contractors work with HUD-registered real estate brokers, called Local Listing Brokers, to accept bids, which can only be submitted by HUD-approved agents.

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3039 Arrow Wood Lane, Indianapolis, In 46214 3039 Arrow Wood Lane, Indianapolis, In 46214 Add to Favorites
Subdivision: Fox Ridge  
Great opportunity to own this end unit condo located just south of Eagle Creek Reservoir in Wayne Township and convenient to interstate access. This 1-2 bedroom home features an open concept main floor with vaulted ceiling and fireplace in the great room,...
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Subdivision: NA  
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2203 South County Road 1300 E, Frankfort, IN 46041 2203 South County Road 1300 E, Frankfort, IN 46041 Add to Favorites
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Manufactured home
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BandWagon Real Estate, LLC
2755 South County Road 150 W, Greencastle, IN 46135 2755 South County Road 150 W, Greencastle, IN 46135 Add to Favorites
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Keller Williams Indy Metro W
8036 North Richardt Avenue, Indianapolis, IN 46256 8036 North Richardt Avenue, Indianapolis, IN 46256 Add to Favorites
Subdivision: Beechler Estates  
Here it is! The large brick ranch is located in a amazing neighborhood on the near NE side of Indianapolis. This 3 bedroom 1.5 bath home has a massive living room and a separate family room. Take note of the huge backyard that is fully fenced. See it quic...
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J. Farmer Realty Inc.
3818 North Arms Place, Terre Haute, IN 47885 3818 North Arms Place, Terre Haute, IN 47885 Add to Favorites
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Atlantis Realty Group, INC
1924 Poplar Street, Terre Haute, IN 47803 1924 Poplar Street, Terre Haute, IN 47803 Add to Favorites
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Berkshire Hathaway Home
27991 South State Road 213, Arcadia, IN 46030 27991 South State Road 213, Arcadia, IN 46030 Add to Favorites
Subdivision: NA  
Amazing opportunity on this charming country home on 1.47 acres! Previously configured with 3 bedrooms & 2 baths with the master bedroom on the main level, the interior has since been completely gutted for remodel. Options abound with the ability to compl...
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RE/MAX Ability Plus
302 South Main Street, Kirklin, IN 46050 302 South Main Street, Kirklin, IN 46050 Add to Favorites
Subdivision: Kirklin  
Classic 2 story home in Kirklin on Main St. Walk to area businesses! Newer windows, det storage building with outdoor bar, enclosed porch, living room and family room, main level master, newer kitchen cabinets, wood burning stove, upstairs has nice refi...
3 Beds, 1 Bath Areas, 1688 SqFt
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Wynkoop Brokerage Firm, LLC
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