Quick tips when buying a foreclosure


The number 1 reason to buy a foreclosure is the potential for a good bargain.

It’s human nature to try and buy something at a discount. That’s why buyers and investors are so interested in buying distressed properties.

While discounts may range from 20 to 40 percent on a short sale or foreclosure – buyers need to proceed carefully before purchasing. Here are a few tips to consider before buying a foreclosure:

  •  Beginners may want to focus on REO’s (Real Estate Owned aka Bank Owned—meaning the bank has already foreclosed on the home and now owns it). New buyers may want to avoid short sales, which often come with lengthy negotiations.  I have had clients fall in love with a short sale home and make a full price offer on it.  After 14-weeks, we still had not received a single response from the bank.  Frustrated, my clients cancelled the offer and went back to looking at REO’s.

A bank isn’t emotionally attached to a REO; it’s just looking to recoup as much of its losses as possible.  So the bank is often more willing to sell the home cheaper, just to get it off its books than a traditional seller.

  • Make sure you get a home inspection. Many distressed properties are sold “As is” and can come with a host of problems.  I always recommend getting a home inspector to inspect the home prior to committing to purchase.

Buyers will then have a list of potential problems with the home and can get cost estimates to repair. Buyers can then use the list to possibly negotiate a lower purchase price.

  • Don’t expect to see immediate appreciation. Even though you are buying at a discount, be careful not to rely on the home appreciating right away.

We’re still in a challenging real estate market and probably are not going to see home prices appreciate much for some time.

 

Foreclosure sign, Jeff McCann specialized in foreclosed real estate in Seattle

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