Five Tips on Buying Foreclosures
November 18, 2009
Buying a foreclosed home can be a great way to get a deal on real estate but it can be daunting if you’ve never done it before. Here are a few tips to consider when you’re thinking about buying a foreclosure.
Know Thy Neighbor – Remember, when you buy a home, it’s like getting married. You’re not just getting a spouse, you’re getting the in-laws and all of the crazy dysfunction that goes with them. Get to know your neighborhood a little. Drive through it at different times of the day. You’ll get a feel for traffic patterns that could disrupt your work day. You’ll also find out if the quiet neighborhood has any issues at night. Check out house sales online and peek at the sex offender registry to keep your children safe.
Due Diligence is Key – The longer a house has been vacant, the more issues there will be. If it was empty during the winter months, pipes may have cracked. That’s just one of many issues that could be present without you even being aware of it. It is imperative that EVERY buyer, regardless of the property, get a private home inspection. This type of pre-caution will keep you from buying the “Money Pit.”
Let the Games Begin – In many areas of this country, banks holding foreclosures on their books want to do one thing at all cost – get those properties off the books. Buyers in those places can get great deals with prices up to 20% off the already reduced prices. Imagine getting home for 65-70% of the market value”¦
These types of deals are not normal in all markets around the country. Banks that hold these properties in some markets act just like any other seller. They want market value, or as close to it as they can get for these properties. If you buy a house for close to market value and then find you need to put thousands of dollars into the home because of an issue that was uncovered, you may end up paying more than if you looked at other homes outside of foreclosure.
Ready, Set, Go!!! – Local banks are more inclined to work with buyers who already have pre-approved financing. While nothing is ever guaranteed, the chance of that financing falling through, compared to someone without pre-approval, is much lower.
Ready, Set”¦Wait??? – While the institutions want you to have all of your ducks in a row, their fowl won’t be so tidy. Buyers must be aware that they are dealing with a corporation with a chain of command, and not a single homeowner who can make quick decisions. Patience is key.
This is not an exhaustive list, but I hope these tips help you if you decide to look at a foreclosure for your next home purchase. There are gems out there in many neighborhoods. With the right financing and realtor, anything is possible.
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