Thinking of buying a foreclosure? Well, if you are you looking to buy a home you might as well look at the bank owned properties for sale. There are plenty of bargains out there to be had on foreclosed properties. Here are 5 tips to buying a foreclosure.
1) Educate yourself on the market
This really goes for just buying in general. It is important to be knowledgeable about the market, neighborhoods, recent sales etc. Find yourself a good Realtor who knows the market. They can help you by sending information on sold properties and other market statistics. Just because a property is owned by a bank doesn’t mean you should buy it. If you buy in an area that’s losing jobs and is riddled with crime, home values are likely to take a lot longer to recover.
2) Get financing first
This is crucial. Lending guidelines have changed over the years. It is harder to get money to buy a home. It may even be harder to finance a bank owned property depending on the neighborhood, condition of home and current market conditions. Make sure you are pre-approved for a mortgage so you are not wasting your time.
3) Finding a foreclosure
You can sign up on various foreclosure websites like Realtytrac.com or Foreclosure.com. There is a charge to be a member of those sites. Most bank owned properties are listed on the MLS so if you are working with a Realtor they can help you find foreclosures as well. It is good to have a Realtor so you can also look at homes being sold by private sellers as well. Sometimes those are the best deals.
4) Get Inspections
When people have trouble paying their bills often times they don’t maintain there home like they should. Don’t assume the bank knows much about the condition of the home. If you are under contract on a foreclosure make sure you get inspections done. It is best to know what is wrong with the home before you buy it. It may seem like a lot of money to hire inspectors but that money could be a drop in the bucket compared to the money you have to spend to fix something.
5) Hire an attorney
When you are under contract on a foreclosure make sure you hire an attorney to represent you in the closing. It is just good to have someone on your side reviewing the closing documents. Don’t assume the bank is going to always do the right thing. The expense could be well worth the money.
Marc Rasmussen
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Regarding point one, I agree that your realtor is likely more knowledgeable of the local demographics of a property than your bank.
And inspections are nearly a must when dealing with foreclosed property. I think that this is often overlooked by prospective buyers, but as you say, it could save a boat load of money by investing in the service.
Great tips! I advise my clients that are considering bank owned properties that it can be a time-consuming process. If they need to close on the property quickly, this is not the best option for them. But, if they have the time and patience, bank owned properties can be diamonds in the rough.