Tips For Buying A Foreclosed Home CHELSEA HERRING
Though it carries some measure of risk, purchasing a foreclosed home can be a lucrative investment for a savvy homebuyer. There is little to no negotiation—banks do not concern themselves with haggling or modifying foreclosed homes. It is the buyer’s responsibility to make repairs, and often, others are making similar offers and the bank will likely default to whichever is highest. All in all, it may take some time and effort to find the home you want, but if you do your research, you can end up with a good deal.
Find Representation Obtain an expert in the field to help you make an informed decision. This mitigates some of the risks of buying a foreclosed some while adding some upfront expenses. To do this, you’ll need a real estate broker that works directly with banks that foreclose homes. Throughout your search, you should be contacting your lender and ensuring that you can get a letter of preapproval for when the process starts so that you don’t lose an opportunity to find a home you want.
Do Your Own Research Just because a foreclosed home is being sold by a bank doesn’t mean that the pricing is necessarily fair. After all, the banks are mostly just looking to avoid losses to as great an extent as possible. However, it’s easy to price compare with online tools—check similar listing in the area to see how the home you’re looking into stacks up. Some real estate databases may list foreclosed homes as real estate owned, or REO. This indicates that the lender now owns the home and is in the process of selling it.
Don't Underestimate The Bid If foreclosed homes in an area are selling quickly, consider making a higher offer when bidding. Even if a house needs work, very seldom can banks be persuaded to knock money off of the asking price if they’re selling comparable houses for more. Obtaining a foreclosed home can be a competitive process, and those who are prepared to buy have a significant advantage over those who try to negotiate a better price.
Get Damage Assessed Purchasing a foreclosed home means inheriting the property as is, with no help from anybody to get it updated. It’s best to approach a foreclosed home with the expectation that it will need at least some work. This can be used to your advantage. By making your purchase contingent on home damage and bringing in a licensed inspector to assess, you can get your foot in the door without committing until you know what you’ll have to do. Pests, mold, leaks, heating, and cooling are just a few of the common things that will need to be inspected before you can get comfortable in your new home.
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