5 Tips for buying a foreclosed home | foreclosureorder.com

5 Tips for buying a foreclosed home

Before buying a foreclosed home, you need to consider a few things as a precautionary measure.

Foreclosed properties can be viewed as great opportunities for people who are looking out for a good deal on a house, considering that lenders usually price a house really low in order to get it off their hands as quickly as possible. However, what you have to understand here is that foreclosed sales considerably differ from regular house shopping. Here’s what you really need to keep an eye out for.

Foreclosure House For Sale Sign in Front of Beautiful Home.

1. Buying a house ‘As-Is’ – It is important for you as a buyer to know what condition the previous owners have left the house in. Sometimes homeowners leave the place bare of all necessities, including any fixtures, door knobs, or even wiring. The lender most likely will not focus on any repairs and will sell the property as-is, but for a considerably low amount.

What you need to calculate and compare here is the cost of repairs versus the price offered and then see whether it would be worth the financial and physical trouble to fix it.

2. Know what you are getting into – Regular home sales mostly require relevant disclosure about the property from the owners, especially if the property is infested with termites or has an unstable foundation. However, a lender has no such obligation towards you, which is why if you decide to invest in a foreclosed home, get ready for some surprises.

3. Make sure the offer isn’t too low – When a lender puts a foreclosed property up for sale at a high discount, you may be tempted to push forward for a much lower offer. Despite the overwhelming list of foreclosed houses, banks might reject your price for the house as it may not be willing to suffer deeper losses on its already failed investment. It might prefer to bide its time until housing costs rise.

One way to turn local foreclosures in your favor is to research on prices that have been tagged on houses recently sold by lenders (also known as real-estate owned or REO sales) to aid you in rightly pricing the property.

4. Prepare to wait it out – Since most lenders are either large banks or financial institutions, the process of buying a foreclosed home is most likely to stretch on for weeks before you hear from the seller. This is mostly due to a lot of legal paperwork involved and level of bureaucracy a decision has to pass through.

5. Difference in sales pitch – Since banks involve real-estate agents who have a volley of foreclosed properties to show and sell, there may be a lack of attention or plain flatness in their sales pitch. If you have less time on your hands while seeing a house and you are unsure of your capability to assess the state of these houses by yourself, it is advisable to tag along a good building inspector who will be able to give you a fair idea about the state of the property. Most times, banks have their own contracts that shield them from any liabilities after the sale has occurred.


Photo Credits: Js2homes.com