Everybody wants to know about the latest foreclosure information - but most people haven't really thought about what it will take to bring that diamond in the rough back to a perfect sparkle. I've spoken to many of you about foreclosures, but here is the dirt, so to speak, on how to make it work for you with as little drama as possible.
Yes, foreclosures seem to be cheaper than a new development: the buildings have history, great location, and much more space than newer developments generally. But the price on the MLS is only the jumping off point – you have to get a bank to back you, a rehabber who can complete the job in the required amount of time, and you have to have a plan for how to make it through the transition so that you can enjoy that diamond you just sunk your life savings and months of time into. Here are some things to keep in mind:
Get a full service realtor – ask them to send you the foreclosure listings in the area of the city (or two) that you want to explore. Narrow that list to ten places and make a drive by. See if the block is up to par – what’s the distance to the school you’ll send your children to, the restaurants, the grocery store, Starbucks, and whatever else you travel to on a regular basis. You need to make sure the place really looks as good as advertised. This will probably knock that list down to five places that you would really like to live in.
Find a mortgage provider who specializes in foreclosures and/or rehabs – there are still plenty around and they can direct you to a loan and a cadre of rehabbers that they approve who do good work. You want to ask about a 203(k) rehab loan. Neighborhood Housing Services of Chicago is a good one, but not the only one, to try. They will also give you some real life stats on how long this process can take and what loan programs have a long enough shelf life to get you through the process. The biggest problem people are finding now is that so many mortgage programs are disappearing overnight, you have to select a program that will fit your schedule, or you may be faced with starting over – or losing your place.
Find a rehabber that your mortgage provider approves. They should give you a list of about five – interview them all, get references and see their most recent work. Make sure their workers are steady and have been with the rehabber for awhile. If you have a dream about how you want your place laid out – make them aware of that early in the process.
Schedule the showings on two separate days. Foreclosures are empty – so be prepared to see the places back to back on two different days. Once you have settled on two or three you want to make an offer on, go back and see those with your rehabber within a few days. The rehabber can tell you realistically how much and how long it will take to get together. It’s a good idea to add another week or two to that time frame – if you’re in early, you’ll be very happy, if not, you won’t be a wreck.
Take the essentials – a camera to make notes of what you just saw, a high beam and low beam flashlight to see everything well, and a long tape measure to confirm your dimensions. Make a floor plan of the finalists and take them with you as you go back with the rehabber. Let them know during that second walk through what you want and where you want it placed.
Have the place inspected – you want a professional opinion on what’s really wrong with the place before you make the offer. Foreclosures are sold “as is” but if you can justify your price with the facts about what’s wrong, you can shave some money off that price and get the owner bank’s approval.
Be prepared for the fact that there are other offers out there – one reason foreclosures take so long is because the bank fields offers from all candidates at one time – but it usually isn’t the day after your offer is presented. There may be more than one person required to sign off on the contract, so don’t expect an immediate answer. You also have to understand that if you selected a place in a very desirable neighborhood, you won’t be able to do too much low balling. Know your high and low point going in, and make your offer in the middle.
Make your rehabber’s contract as specific as possible and write in penalties for non-compliance. People understand money and if they realize that they’ll lose some for slacking, you’ll settle a lot of arguments before they get started. You should plan on spending as much time as possible at the site, at least once a day to see the progress or lack thereof. Your realtor can also help you keep tab on the progress. Most have project managers just for this purpose.
Get the approval of your condo association ahead of time. Most will be so glad that the place is being taken, they won’t argue. You do need to make sure your plans won’t be a sharp contrast to the standards of the condo association. You should also let your new neighbors know what the plan is for the rehab. They need to know time frame, and they need to know what the people look like who are coming into the building regularly.
Ask your realtor to find a temp location for you to stay during the rehab so that you aren’t living out of a suitcase in crowded surroundings. Realtors have connections with corporate housing managers and leasing managers. We can sometimes get a good discount off the listed corporate housing price. Rehabs on foreclosures are draining processes. Your realtor is there to help you get through it with your sanity intact.
Trust the process – foreclosures can be incredibly aggravating – mortgage programs close, rehabbers jump ship, and what seemed like a simple rehab can take a sudden turn if you find out too late that there is more wrong than you originally thought. Take a long view approach, and you’ll be in your dream house in due time.
Pizza Capri – 5307 S. Harper 773-324-7114 – Someone pointed out to me that they had seen me twice at Pizza Capri and yet I hadn’t covered the restaurant in this blog – I apologize. Pizza Capri is one of my favorite places in Hyde Park. This is a new comer, it wasn’t around during my Kenwood days, but I visit it often with my family. I usually have their pasta. They make a great pesto sauce, which is hard to come by. The pizza is also a favorite with some, but I haven’t tried it yet. Maybe the next time I’m in the area, I’ll give it a go.
Court Theatre – Wait Until Dark – March 5 – April 5 5535 S. Ellis 773-753-4472 (Please don’t get your tickets through Ticketmaster – call direct and get the best seats) – this thriller revolves around a special package that a blind woman holds, unbeknownst to her. I remember the movie with Audrey Hepburn, and I can’t wait to see this one.
