Buying a home out of forclosure is a popular option to get a good deal on a house, but its not without hassle. Searching for forclosure houses near me on websites or bank listings can be a good way to house buy. These are generally auctions in your area that are run by banks at regular intervals, where a number of properties are sold at once.
There are probably a lot of reasons why you are considering pursuing the purchase of a foreclosed home. Buying a foreclosed home can offer you fantastic pricing and save you tons of money on the home of your dreams, but it has some drawbacks.
Buying a foreclosed home can be one serious grind. It’s not easy, and it can require you to check out a ton of houses, and make a ton of offers before you finally get your hands on one. If you’re going into blind, you might have a very hard time getting the kind of outcome you want.
Luckily, we’ve come up with six tips that you should definitely know before you considering buying a foreclosed home.
1. Find a Real Estate Specialist and a Lender to find foreclosures
These are the first two things you should do as you prepare to purchase a foreclosed home or property. You can do them at the same time, and they will go a long way in terms of getting on the right track. Realtors would have listings of homes available, usually from websites or banks. What’s important to know is that as you are looking for a real estate broker who will work directly with the banks that own the homes that have been foreclosed, you should also work to get preapproval from a mortgage lender.
A good place to start your search is for online databases that have foreclosed homes in the market you are interested In buying from. A good type of foreclosed home to begin with are homes known as real estate owned. This means that the property has been foreclosed on and that the lender now owns it and is selling it.
2. Get a Broker to Help You buy Foreclosed Houses
The main goal of sifting through the long list of foreclosed homes is not to find a specific home, it’s to find an agent. That’s because banks that own the foreclosed homes usually hire real estate brokers to handle their properties.
Because of that, Realtors often have long-term relationships with the banks they work with. They can help you navigate the market and can even give you inside information on properties that are available, but have not yet made their way to public foreclosed home lists.
Another tip to consider is that in markets where there are thousands of forecloses properties, you might not be taken seriously from agents who are already working with tons of prospective buyers. To prove that you mean business, meet with potential lenders and get a loan pre-approved before you meet with an agent who might be able to point you in the right direction.
3. That Pre-Approval Really is Important when buying a foreclosure
Unless you’re planning on paying for a foreclosed home in cash, you’ll need to get a recent preapproval letter from a lender. That letter will divulge how much money you will be able to borrow based on your credit and proof of income. Most homes sell with cash. Also if you really like the place you can make an offer to buy pre-foreclosure.
While it may be tempting to focus on the house first, it really is important to primarily focus on what amount of money is available to you. One you know that, you will get a better idea of what kind of homes are available to you. It’s a great way to narrow down your choices right from the jump. It might seem like an unnecessary restriction, it will actually help you go through the entire process faster and easier.
One thing that some first-time buyers assume is that the bank that owns the foreclosed property will also offer you loan. This would be a mistake. While it’s not mutually exclusive, the two transactions are entirely different. The people you will be working with, in the bank’s REO department, are not loan officers, and they will know nothing of your ability to take out a loan. So, don’t expect help from them on that front!
4. Get a Good Feel for the Market of repo’s
One great way to get a feel for the existing market for foreclosed homes in your area is to look at recent sales of comparable properties.
This will help you figure out how much they’re going for, and will give you a good idea of what kind of money you can expect to spend to buy a house of your own.
It can also help you if there is a home that you want, that is a bit out of your price range. If you find homes that are comparable to the property you desire, but was sold for less, you might be able to come in with a lower offer and close on the deal for a much more affordable price.
5. If Homes Are Selling Quickly, Bid High at Auction
On the other side of the coin, if you find that many of your applications are being beat out, or that houses are seemingly disappearing at the market at break-neck speed, but bid a bit high and come to terms with swallowing the cost.
If foreclosed homes that you are looking at are selling quickly, the best thing you can do is come in with your best offer and see what that nets you. After all, there’s no good in providing low-ball offers if it doesn’t result in you actually buying the home.
6. Find Someone to Assess Any Damage
Repairs are basically a forgone conclusion when it comes to foreclosed homes and it is crucial that you get an expert who can assess the damage, and the costs of repairing it, on any foreclosed home. From mold, to termites, to leaks, and more, find someone who can do a comprehensive assessment of the home so that you know what you’re going to have to fix before you can really live comfortably in your new home. It can also help you when it comes to deciding what amount you truly want to offer the seller.
It all sounds daunting, but what’s more daunting is being stuck with a newly-purchased home that’s going to cost thousands to repair, especially if you just used a loan to purchase the home in the first place!
If you know what needs to be repaired before you purchase the foreclosed home, you can factor all the expenses in and pay for it with a personal loan.