Few people know that the foreclosures are a pain not only for owners, but for buyers too.
Buying a nightmare
So, a year ago we decided to look to buy a house for us, we are married, 31 years old, in the US legally, permanent residents for 3 years. We have a very good credit score, we both work,we had money for about 10% down and closing.
We first started looking for a housea year ago around $170k, and we had a conventional loan preapproval for it. After a few months and a few offers not getting accepted because our realtor was pushing us for a much lower price, Bank of America let us know that the new conventional loans ask for 20% down, instead of 10% when we qualified. So, we had to go for an FHA.
Realtors do the deal
Therefore, while most of the foreclosures were priced attractively, a significant part required repairs, appliances and other fixings, and the FHA loan would not allow us to buy this type of properties. On the other hand, for some of the foreclosures that were nice and could have worked, the listing agents already had their own buyers or offers and our offer didn't even get to the bank. Yes, we managed to check with a bank to see if they got our offer, unfortunately all the deals are basically "managed" by their listing agent, because the banks don't have any contact information for possible buyers.
No cash? No foreclosures.
Then, something else happened in the market. The investors are starting to buy like crazy. Cash. So for all our offers for nice foreclosed houses, not only we had to offer above the listing price, because they had multiple offers, we didn't actually have any chance with an FHA loan. The banks prefer to take $20-30k less for a cash offer, than accept our FHA offer, even though much higher and even though we are preapproved and all the paperwork was checked.
Not to mention, our FHA loan broker, Countrywide, now Bank of America, just let us know that they probably need more than 30 days to close.
No condos for FHA
Then, seeing that we don't have too many chances for a house, we thought to maybe look for a townhouse or a condo and buy something when the prices are still low. Guess what?! Most of the communities have too many condos for sale or have financial problems because of people who don't pay their HOA dues, so the bank would not approve the community for our conventional or FHA loan.
Short sales, maybe
In these circumstances, we only have a slight chance for short sales, who take, yes, actually take months. Months until the bank decides if our offer is ok or not.
And this is why the poor and middle or low income people still don't stand a chance, even with foreclosures. And yes, it's very frustrating to see on TV how people keep showing how much the prices are down and how you can buy a house for $10k. Yea, maybe, if you are looking for a ghetto house and in some very cheap state. Otherwise, again the investors have to gain. And a year later we still didn't benefit from this.
And we are left disgusted by realtors and banks.