Three Things You Need To Know About Purchasing A Foreclosed Home

Real Estate Blog

If you're currently in the market for a home, you may be tempted by the prices of foreclosed properties you've seen. Although it's true that these homes are frequently listed below market rate, they aren't a guaranteed bargain. Because buying a foreclosure doesn't come with some of the safeguards involved with conventional financing, buyers can actually lose money if aren't careful. Following are three things you should do when considering going the foreclosure route in order to save money.

Avoid Foreclosure Auctions

Foreclosure auctions aren't for the inexperienced. Most of those in attendance are professional real estate investors who are highly familiar with the intricacies involved in purchasing foreclosed property for the purpose of reselling it and making a profit. However, foreclosures often require significant repairs before they can compete with similar homes on the open market, and home inspection waivers aren't part of the picture with foreclosures. You probably won't even be able to see the inside of the home prior to the auction, and if you win and then discover serious issues with the home, you won't be able to back out of the sale. It's also easy to get caught up in spur-of-the-moment bidding wars when buying a foreclosed home at an auction.

Always Hire an Inspector

Although foreclosures can legally be sold without a home inspection, paying a professional to perform an independent inspection to ensure that you know what you're getting into in the way of repair bills. It's not necessary to completely rule out a property because it needs significant repairs — but you do need to have a realistic figure to work with so you'll know whether you're actually getting a bargain.

It Helps to Be Handy 

If the home is basically sound and just requires cosmetic upgrades such as paint, new cabinets, and landscaping, you may easily come out ahead if you perform most of these tasks yourself. However, if you have no experience with home improvement projects, you may find yourself in a position where you're losing whatever savings you may have gained if you need to pay professionals to perform these services. On the plus side, banks are generally extremely motivated to sell the foreclosed properties they've been stuck with when the former buyer didn't keep up with the payments. Don't be afraid to negotiate after you've had a home inspection done and gotten estimates for necessary repairs. 

If you want to buy a home that was foreclosed on, reach out to a real estate agent to learn more.

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30 April 2019

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