What You Need to Know About Buying a Foreclosed Home
Home foreclosures continue to impact local housing markets, with some areas of the country still recovering from deep losses and repossessions dating back to the late 2000s. Despite the decreased number of foreclosed homes on the market, you can find and make a bid for one in hopes of landing a bargain.
1. Look around. Some foreclosed homes are out there in plain site with “for sale” signs out front that are topped by “foreclosed” inserts. You can also check with your bank, local real estate agents and visit a site such as RealtyTrac.com that does an excellent job of featuring affected homes in your area.
2. Talk with your banker. Unless you have cash to cover the costs of buying a foreclosed home, you will need to finance it. This is where you make an appointment with your banker or a mortgage broker to state your interest. Your potential lender will want certain details about the home including its address, its overall condition and whether it is occupied or not.
3. Enlist the help of a real estate agent. Find a real estate agent that has experience with foreclosures to represent your interests. Your agent will know what approach to take next, whether to contact the owner or the lender for assistance.
4. Reach out to the owner. Chances are the owner still has an interest in the home. He may not have been evicted and he may be looking to sell the home himself. If the buyer has built up substantial equity in the home, you have some room to offer a lower than market price to buy the home. If the owner is no longer involved, you will deal with a banker, an auction house or a government agency. Your real estate agent can help uncover those details for you too.
5. Present your offer. When you find a foreclosed home that you’re interested in buying, get it inspected to determine what it will cost you to bring it up to market condition. Then, base your bid on local home values minus the cost of repairs and the profit you would like to make from your purchase. A lowball offer may be rejected outright, while a competitive offer may receive serious consideration.
Your own financial position and personal initiative can go a long way toward securing a foreclosed home. Do your homework, make a competitive offer and plan to move on quickly if your offer is turned down.