Buying a foreclosure, says firsttime home buyer Jena Edone, “can be a little scary when there’s no seller involved, and there’s no disclosure on what’s happened to the property. You’re going visually on what the place looks like till the inspection. But the flip side is, you can walk away with a really great deal.”
Jena and her husband, Anthony, were living in a rental in Little Ferry when they began to think about buying. “The first time you look, it’s a leap of faith, and then you chicken out,” says Jena, recalling the couple’s initial tentative survey of the market.
But as mortgage rates continued to drop, they decided it was time to become serious.
Among the first six homes they visited was a Dumont three-bedroom with an open floor plan and hardwood floors.
“As soon as you walk in, there’s tons of natural light,” Jena says. “We walked in and said, ‘This is it!’ We made an offer.”
Because the home was in foreclosure, the previous owner was not involved in the sale. The Edones were apprehensive about not being able to learn the history of the house or ask about the neighbors and the neighborhood. But because both Jena and Anthony grew up in Bergen County, they were familiar with the area.
Dealing with bank
The house was listed at $309,000. When they offered $285,000, the bank came back with a price of $300,000, plus a seller’s concession of $10,000 for closing costs. They felt lucky to get a three-bedroom, two-bathroom house with a finished attic for that price. “It’s unheard of!” says Jena. “It’s hard to get a decent home in Bergen County for $300,000 in a place with a good school system. It’s almost like a dream.”
The purchase process moved along quickly. “The bank wants to unload the property as fast as possible,” Jena points out.
They had 10 days after an attorney review to have the home inspected. If problems were found that were too expensive to correct, they would have to back out of the deal.
Luckily, the house turned out to be in excellent condition. No structural problems were found. But before the Edones could get a certificate of occupancy, the inspector told them the sump pump required a drain that pumped water to the outside of home. They had to pay to install the drain.
Their real estate agent, Liz Labruna of Exit Realty in Ridgefield Park, says it’s unusual to find a foreclosure in such good shape.
“It was sold by Hudson City Savings Bank, which rarely has foreclosures because they have such strict guidelines for borrowers,” she said. “The owners of this house were well off and then lost their business, and everything went downhill from there.”
When foreclosure happens, the owners are often bitter and wreck the house in frustration, says Labruna, who was surprised to find that this particular house was empty and cleaned out.
The exception to the rule that banks won’t make repairs on foreclosed homes is when there’s a termite problem. In this case, says Labruna, the bank did pay to have the house treated for termites. With a regular home sale, she adds, the seller is generally responsible for obtaining a certificate of occupancy in towns that require them. With foreclosure, the certificate is the buyer’s responsibility, so the Edones had to invest in the necessary repairs.
3.5% down payment
Labruna recommended a mortgage broker whose efficiency made the process easy to navigate. “With my operations background, I appreciate lists and todos and tasks,” Jena says. “He took me through exactly how things were going to work.”
Originally, they had planned to put off buying until they had saved up a substantial down payment, but as Jena observes, 20 percent is “a big chunk of cash for first-time buyers.”
With a federally backed FHA loan, they had to put only 3.5 percent down and were able to get a 30-year fixed rate of 4 percent.
Dumont is ideal for the Edones. Anthony is not far from his job at a swimming pool and spa business in Ramsey, and Jena can easily use public transportation to get to Manhattan, where she is an international field trainer.
They closed in late October and plan to spend a couple of weeks painting and otherwise personalizing the house before moving in.
“We’re both pleasantly shocked at how smoothly it’s gone,” marvels Jena. “I’ve heard crazy stories. We’re happy we can say it’s been an easy process for us.”
The couple were apprehensive about not being able to learn the history of the house or ask about the neighbors.