What to Know About Buying a Foreclosure
With the recent wave of foreclosures that have hit the nation so hard, there are now more than ever before more foreclosed properties that banks now have on their books and need to get rid of. These foreclosures can represent a great deal of saving to a potential buyer, but there are a few things that you should take into account before you think you are just going to run out and snatch one up.
Here are a few factors that you need to be aware of if you intend on trying to buy a foreclosure:
• Cash is King: The most common way to get a hold of a foreclosure is at a public auction. The process is tricky in itself, but there is one thing that many people don’t take into account; you need cash. If your bid is the winning bid, you have to be ready to pay cash for the property. So, cash is not only king, it is the only way to ensure you actually get the property you are seeking at auction.
• Expect the Uninspectable: Many times you will not be allowed to inspect the interior of a foreclosure which will leave you with a lot of questions. Rest assured if you see one ton of trash on the outside of the property, there is usually double inside. Plus, many former tenants will take everything they can when vacating the home such as appliances leaving you with a lot to consider cost wise. You can always check with the building department and see if any permits were pulled for interior remodeling and at least know if any improvements were made or attempted.
• You Can’t Go It Alone: In order to buy a foreclosure the right way, your best bet is to find a real estate agent who deals in foreclosures. While this might represent a cost to you, it can end up saving you if you have no idea what you are doing. Plus, an experienced real estate agent can help you find what are known as ‘real estate owned’ foreclosures, or REOs. These REOs are foreclosures that don’t get purchased at auction and end up on the banks’ books. An experienced agent can help you to negotiate the best possible price directly with a bank and possible save you more than what their fee to you may be.
• Weigh out the Savings: Above all else you have to weigh out the savings. If you are going to save $25,000 on your foreclosure purchase then you have to be sure that your costs for making the property livable won’t go over that. Take into account all that needs to be repaired and get generous estimates to ensure that your great deal doesn’t turn into a money pit.
Remember, a foreclosure is only a great deal if you save money in the end. By working with a pro, conducting a lot of homework, and exercising some patients, you may very well be able to find your dream home at a price that simply can’t be beat.