Tips for Purchasing a Foreclosure
The housing slump that has affected the country over the past few years has created a large supply of foreclosed homes. This can be a good thing for buyers that take necessary precautions when looking at a home. Here are some tips for those buyers interested in buying a foreclosure.
Don’t Be Ruled by Actions of Others
With the numerous homes available for sale it can feel like there is a lot of buyers seeking out a foreclosed home. This could apply pressure to people and force them to put an offer on the first available home that falls in their price range. Or, it can cause people to start bidding on foreclosed homes, effectively driving up the price. Talk to a real estate agent, get an understanding of the market, and know which home is truly a bargain.
Make Sure Your Lender Knows You are Looking at a Foreclosure
Some lenders will require a certain inspection or various tests to be performed on a home if it is a foreclosure. Make sure to let your lender know that you have talked to a real estate agent and that some of the homes you are considering may be foreclosed properties.
Don’t Ignore Homes In Need of Repair
Foreclosures have a bad reputation for one reason; the previous owners could not afford to make the payments, therefore they likely could not afford to make necessary maintenance. However, this does not mean that the home is not safe for dwelling. It could mean that a window needs a $60 replacement pane or the heating system needs a $100 tune up by a local technician. Look over the homes with a careful eye and if one seems to peak your interest then order an inspection of the home to see if it meets your needs.
Consider the use of a Real Estate Attorney
Banks and lenders may put various requirements in a real estate contract when dealing with a foreclosure. These items may be confusing and tough to understand on your own. In order to protect your investment it would be in your best interest to hire the services of an attorney with experience in real estate contracts.
Approach the Offer Amount Wisely
The main reason people consider buying a foreclosure is to save money. Don’t buy a home that is near your maximum lending limit. As previously mentioned, there may be some necessary repair costs associated with the home, as well as closing costs for the home inspection and attorney fees. Save room in your budget for these costs to keep from getting over extended. Your real estate agent can work with you to help determine an acceptable offer range.
Several people have saved lots of money on a great home in a prime location by purchasing a foreclosure. Approaching the purchase with a little bit of caution, and understanding that you may have some extra work to undertake once you have bought the home, you too could be the proud owner of a great home that brings you years of joy.
Posted on June 27, 2012 at 9:35 am by Michael Collins, CDPE, SFR