Even with the economy finally starting to picking up steam, there are still a lot of valuable bank owned foreclosure deals to be had in the real estate market. You simply need to know what to look for and be ready to act when you find one. Here are a few important tips to keep in mind when looking to buy a foreclosed home.
Not all foreclosures are a good deal. Don’t just assume that because a property is foreclosed it’s a good deal. Look at prices of other houses in the same neighborhood to see where yours falls. Even if there’s a bit of wiggle room between the asking price and current market value, you need to be aware of what repairs the property will require. A home may be listed $20,000 below other homes in the neighborhood, but if it has a crumbling foundation and mold in the crawl space, that $20k bump may suddenly not feel quite so big.
Be Prepared. If you do find a good deal amongst the many, chances are you’re not the only one eyeing it. Be ready to act quickly with a pre-approval and a knowledgeable realtor and you’ll have a much better chance of claiming the prize.
Inspections are Important. Most foreclosed houses have been sitting unoccupied for several months and could have any number of problems or issues that need to be fixed. It’s almost guaranteed that you will be required to shell out dollars above and beyond the final accepted price so be sure get the property inspected and know what you’re dealing with. Trust me when I tell you that it will be dollars well spent.
Foreclosure Homes are Typically Sold As Is. Chances are high that you will be responsible for any and all repairs going into a foreclosure situation. That being said, depending on the bank you’re dealing with, once the price has been agreed upon it doesn’t necessarily hurt to go back and ask for some money off the asking price based on inspection results. We recently bought a foreclosed home in our neighborhood through Fannie Mae and were able to get $15k knocked off the price due to major repairs that were needed on the home. It’s not necessarily the norm, but you never know unless you ask.
Banks Want to Get These Properties Off Their Books. The best place to work with the bank to save some money in your pocket book is at closing time. Many times banks will offer to pay for title insurance and a portion of the closing costs as an incentive to the prospective buyer. Remember, they’re not in the business of buying and selling properties and it’s their desire to get the property sold just as much as it’s your desire to buy it.
Foreclosures can be an exciting way to get a great deal on a home and build instant equity. Learning the ins and outs of buying these properties ahead of time will help you make a better investment when the time finally comes to put down that desired offer.
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