My Kansas City clients continually ask for a resource that will guide them to foreclosed homes listed in the MLS. This page provides a majority of the listings for foreclosed homes in the Kansas City Association of Realtors Multiple Listing Service. There is a market for foreclosed homes in Kansas City, but be careful. It takes someone with expertise in dealing with foreclosures to make the purchase as smooth a transaction as possible.
I have been working with Kansas City home buyers and foreclosed homes since 2004. Buying a foreclosed home is a very time intensive process. It is vital that you work with an agent who has the experience to negotiate on your behalf: someone who knows what information banks need and how to get buyers the best deal.
If you are ready to buy a foreclosed home, I am the real estate agent for you. I have nearly 10 years of experience buying homes from HUD and Fannie May, as well as bank-owned foreclosed homes.
I have the designation of Certified Distressed Property Expert (or CDPE), indicating that I am a Kansas City agent who has specialized knowledge and credentials to navigate the waters of foreclosed home sales successfully. This designation is important to the loan officers and people in the foreclosed homes sector.
Below, I answer some common questions I receive about the foreclosures market. Call (816) 866-5043 for more information on the foreclosed home buying process.
You should be cautious when considering a foreclosed home in Kansas City. Many experts, in fact, advise inexperienced buyers to hire an expert to take them through the process. It is important to have the home thoroughly inspected and to be sure that any liens, undisclosed mortgages or court judgments are cleared or at least disclosed.
Judicial foreclosure action is a proceeding in which a mortgage, a trustee or another lienholder on property requests a court-supervised sale of the property to cover the unpaid balance of a delinquent debt.
Non-judicial foreclosure is the process of selling real property under a power of sale in a mortgage or deed of trust that is in default. In such a foreclosed home sale, however, the lender is unable to obtain a deficiency judgment, which makes some title insurance companies reluctant to issue a policy.
In most states, a foreclosed home notice must be published in the legal notices section of a local newspaper (like the Kansas City Star) where the property is located or in the nearest city. Also, foreclosed home notices are usually posted on the property itself and somewhere in the city, where the sale is to take place.
When a homeowner is late on three payments, the bank will record a notice of default against the property. When the owner fails to pay up, a trustee sale is held, and the foreclosed home is sold to the highest bidder. The financial institution that has initiated proceedings usually will set the bid price at the loan amount.
Despite these seemingly straightforward rules, buying a foreclosed home is not as easy as it may sound. Sophisticated investors use the technique so novices may find themselves among stiff competition when considering foreclosed homes.
If you are strapped for cash and looking for a bargain, you may be able to buy one of the foreclosed homes in Kansas City acquired by the U.S. Department of Housing and Urban Development for as little as $100 down.
With HUD foreclosures, down payments vary depending on whether the property is eligible for FHA insurance. If not, payments range from 5 to 20 percent. But when the property is FHA-insured, the down payment can go much lower.
Each offer must be accompanied by an "earnest money" deposit equal to 5 percent of the bid price, not to exceed $2,000 but not less than $500.
The U.S. Department of Veterans Affairs also offers foreclosed homes which can be purchased directly from the VA often well below market value and with a down payment amount as low as 2 percent for owner-occupants. Investors may be required to pay up to 10 percent of the purchase price as a down payment. This is because the VA guarantees home loans and often ends up owning the foreclosed home if the veteran defaults.
If you are interested in purchasing a VA foreclosed home, call 1-800-827-1000 to request a current KC listing. About 100 new properties are listed every two weeks.
You should be aware that foreclosed homes are sold "as is," meaning limited repairs have been made but no structural or mechanical warranties are implied.
You can only purchase a U.S. Department of Housing and Urban Development property through a licensed real estate broker. HUD will pay the broker's commission up to 6 percent of the sales price of the foreclosed home.
The U.S. Department of Housing and Urban Development acquires properties from lenders who foreclose on mortgages insured by HUD. These properties are available for sale to both homeowner-occupants and investors.
You can only purchase a HUD-owned foreclosed home in Kansas City through a licensed real estate broker. HUD will pay the broker's commission up to 6 percent of the sales price.
Down payments vary depending on whether the foreclosed home is eligible for FHA insurance. If not, payments range from the conventional market's 5 to 20 percent.
Buying a foreclosed home can be risky, especially for the novice. Usually, you buy a foreclosed home "as is," which means there is no warranty implied for the condition of the property (in other words, you can't go back to the seller for repairs). The condition of the home is usually not known because an inspection of the interior of the house is not possible before the sale.
In addition, there may be problems with the title of the home, though that is something you can check out before the purchase.
Buying directly at a legal foreclosure sale is risky and dangerous. It is strictly caveat emptor ("Let the buyer beware").
The government foreclosed homes buying process has many disadvantages. There is no financing; you need cash and lots of it. The title needs to be checked before the purchase or the buyer could buy a seriously deficient title. The property's condition is not well known and an interior inspection of the property may not be possible before the sale.
In addition, only estate (probate) and foreclosed home sales are exempt from some state disclosure laws. In both cases, the law protects the foreclosed home seller (usually an heir or financial institution) who has recently acquired the property through adverse circumstances and may have little or no direct information about it.
One reason there are few bidders at a foreclosure home sale is that it is next to impossible to get financing for such a property. You generally need to show up with cash and lots of it, or a line of credit with your bank upon which you can draw cashier's checks.
A trustee sale of a foreclosed home is advertised in advance and requires an all-cash bid. A sheriff, a constable or lawyer acting as trustee usually conducts this type of sale, which usually attracts savvy investors and is not for the novice.
In a trustee sale, the lender who holds the first loan on the property starts the bidding at the amount of the loan being foreclosed. Successful bidders receive a trustee's deed for the foreclosed home.
As you search for your dream home, you may stumble across some questions. If your dream home happens to be a foreclosed property, don't stress. We can help! With years of experience, we have all the answers to your questions.
If you have any more inquiries about foreclosed homes and the buying process, or if you want to make an appointment to view a home in Kansas City, call (816) 866-5043.