Mortgage 101: Buying A Foreclosed Property
Foreclosures: Bargain or Bust?
There simply aren’t as many foreclosed properties on the market as there used to be. Just last year, foreclosure inventory fell to its lowest level since 2007, which is actually a good sign for the overall health of the housing market. That being said, while they’re not as plentiful as they once were, foreclosure bargains are still out there and, while risky, they can offer excellent opportunities for house hunters on a budget. These homes tend to have more than their fair share of potential issues, and the buying process is a bit different, so it’s important to be cautious when considering making a purchase. If you are hoping to score a great deal on your next home through a foreclosure then we have some tips to help you avoid the pitfalls.
Where to Start Your Search
So you’re interested in buying a foreclosed property but don’t know where to start looking? For starters, you can check the foreclosure listings at Homes.com. We feature a wide array of distressed properties, even featuring homes that are located in some the hottest real estate markets in the country. You’ll typically need to register to see the exact address or to view the opening bid, but it’s certainly worth the price of admission. You can also check your local newspaper for foreclosure listings, search the public RMLS listings online, attend a local foreclosure seminar, or get in touch with a local agent who knows the market in your area. And while we’re on the subject of real estate agents…
Find the Right Agent
The process of purchasing a foreclosed home is considerably different than buying from a homeowner, which can be daunting enough on its own. That’s why many foreclosure hunters choose to enlist the services of a real estate agent who specializes in distressed properties. Having a seasoned professional in your corner can help you avoid common issues and set realistic expectations. Plus, your agent may have the inside scoop on the latest properties to hit the market.
Don’t Buy Sight-Unseen
Whatever you do, do not buy a foreclosed property without seeing it “in the flesh.” The description may not match the true condition of the property, especially if it’s been awhile since the last inspection. The last thing you want to do is purchase a property only to uncover extensive and costly problems after moving in.
Get Pre-Approved for Financing
If you’re shopping in a hot real estate market then you’ve probably heard stories about fierce bidding wars. The foreclosure market can be every bit as competitive, if not more so. Getting pre-approved for financing is one of the best ways to give yourself an edge over other potential buyers. While their actions may suggest otherwise, banks want to offload foreclosed properties as quickly as possible. When they’re ready to accept your offer, you need to be ready to pull the trigger.
Foreclosures Are Sold As-Is
When purchasing a home from a private owner, you may be able to ask for certain concessions before you commit to a purchase. That’s not the case with a foreclosure property. When buying a bank-owned home what you see is what you get, so it’s definitely in your best interest to get a private inspection before you buy.
Check the Title Report on the Foreclosed Property
There are no disclosures on foreclosure properties so you’ll need to do your due diligence and investigate the background and legal status of any potential buy. The title report can reveal red flags such as liens for back property taxes, mortgage liens, easements, or historic district restrictions that could limit your ability to renovate your newfound fixer-upper, so make sure you read it carefully.
Proceed With Caution
We’re certainly not trying to scare anyone away from buying a foreclosed home. After all, many a cash-strapped homebuyer has achieved the dream of homeownership by purchasing a distressed property. But as you can see, it’s wise to be cautious when considering foreclosures and to come into the process prepared. As always, best of luck, and happy house hunting!
As always, best of luck, and happy house hunting!
Homes.com is the place to dream and discover your ideal home! Are you starting to get the itch to look for your first or next home, but don’t know where to start? You’ve come to the right place! Browse our real estate and lifestyle blog for home buying tips, mortgage guides, DIY ideas, interior design, lifestyle topics, general home inspiration, or just some homes fun. We are sure you can scratch that itch and find all the information and tools you need to help in your home search. Want to start looking at available real estate right now? Head to our home page and check out homes for sale or rent listings all over the country.
Happy house hunting!