Purchasing a foreclosed property is one of the best ways to find a great deal and secure an investment that can have large payoffs in the long run. Although it’s an option for many individuals, there are still important key factors to utilize to ensure that the purchase is a successful one.
Even when scoring an amazing deal on a foreclosed property, there’s still plenty of room to negotiate, especially due to foreclosed homes selling for 20 percent less than other properties in the neighborhood. Have patience and make a lower offer to have a chance of saving an extra few thousand dollars.
DO Inspect the Property
Like any home that is a potential option to purchase, it’s crucial to have the property inspected before making an offer. Foreclosed homes have more of a risk of being left in a state that is not up to par, making it important to have professional inspectors sent to the home to look for possible water damage, electrical problems, and even structural issues.
Other important factors that are necessary for inspection include the plumbing, HVAC, and insect damage.
DON’T Attend an Auction
It can be alluring to attend an auction for foreclosed properties currently on the market, but there is a major amount of risk involved between the quality of the property to liens that may be enforced. Liens that are still in place for properties create a huge challenge for new buyers and are a headache with the legal process that it requires, not worth the deal that may be attained with the purchase.
Instead, it’s better to buy from the bank, which will be responsible for paying off any liens.
DO Get Pre-Qualified
Jump through the hoops of getting a loan before making an offer on a property, which can make the process even more complicated and make it possible to lose the house due to other offers often pending. It’s important to have a letter of pre-qualification before beginning the search, and not waiting for the bank that’s selling the home to approve you for a loan.
DON’T Expect the Property to Be in Excellent Condition
Most foreclosed properties are in need of maintenance and a number of repairs, making it crucial to have a certain amount of money set aside and the energy to put in the time needed to restore the condition. Buyers can expect the repairs to cost about 10 percent of the home’s selling price. Even homes that are still new and only a few years old will often still need many repairs.
DO Work with an Agent
By working closely with an agent, it will help to know about the most recent foreclosed listings in the area that the bank alerts the agent about. It will help to be in the know about homes that have not been advertised to the public yet to have the upper hand and score a better deal.