The buzzword in today’s real estate market is Foreclosure. Here are some 5 tips to buying a foreclosure.
1) Don’t assume all foreclosures are great deals.
Just because it is a foreclosure does not mean that it is a great deal. I have seen many over priced bank owned properties. Many of the smaller community banks are overpricing their properties. While the Fannie Mae and Freddie Mac properties seem to be priced more aggressively. Hire a good Realtor and learn the market.
2) Don’t buy in the wrong area.
Location is still the most important thing in real estate. Just because you found a foreclosure in a less than desirable area doesn’t mean you should buy it. A good investment is finding an aggressively priced bank owned property in a good location. Price is not the only factor when buying a home.
3) Get an inspection
You need to know as much as possible about the home BEFORE you own it. Make sure you get it thoroughly inspected. Make sure your purchase agreement has an inspection clause.
4) Get a title search
Make sure your title company or the attorney representing you does a title search. Title insurance is worth the investment.
5) Hire a good attorney
It is good to have experts on your side. They are like insurance. Most of the time you don’t need them but the one time you do it is really good to have them. Be wise and surround yourself with experts – Realtor, Attorney and Inspectors.
There are some good deals out there in the foreclosure market. However, you should not ignore a great property with a realistic seller that is price right. You can still find a good deal with a traditional seller. Good luck.
Marc Rasmussen
{ 5 comments… read them below or add one }
Lots of good tips! It is funny how everyone thinks foreclosures are the best deal in the world. Granted some of them are but some of them are my worst nightmare!
You could not be more right about point #1. Many of th epeople being foreclosed on today had 100% or more financing. So the banks are less likely to discount than if the buyers had put 20% down.
Getting an inspection is paramount. A potential buyer needs to have a realistic idea of renovation and repair costs, BEFORE jumping into a foreclosure. If the purchase price plus the renovation and repair costs exceeds the value of the home, you should walk away from the house.
Do you know if a homeowner can stop paying on their second mortgage, and keep the first current — can they prevent losing their house?
I think getting a proper inspection should be number one on the list. With an inspection you can thoroughly look over the property and see what any issues there might be and opportunities for possible improvement to the property for resale.