Buying a Foreclosure
Buying a Foreclosure
Buying a Foreclosure
Saving money is always a good thing, especially in real estate. Since everyone loves a deal, some consider buying foreclosed property. A foreclosure is a property that has been repossessed by the lender due to non-payment by the previous owners. The lender then lists the property for sale, often under full market value. There are great deals to be had when buying a foreclosure, but there are a few things you should keep in mind:
Savings!
Price is king and many foreclosures are priced under market value, which attracts buyers. Cheap is great, but there may be other costs to keep in mind. The price of the property should reflect both the location and condition. If it is in extreme disrepair, make sure it will still be a good deal once you’ve invested money into repairs. Sometimes it’s still a great deal and sometimes, you’re better off going with something in better condition.
Making an offer on a foreclosure is a bit different than a non-foreclosure. Because they are priced under market, they attract buyers and often receive multiple offers. You may only get one shot at the offer, so make it count. Keep in mind, the seller is a bank and is only looking for the strongest offer—there is no emotion in the decision. Bring your best reasonable offer, avoid contingencies if possible and show proof of funds or preapproval.
Patience is required when Buying a Foreclosure
Unlike a traditional purchase, a foreclosure will most likely take longer to close. The time frames can vary depending on the vendors used in the transaction. It can be smooth or it can be frustrating (and sometimes a bit of both)—but you need to be prepared to wait, in case it takes a bit longer than anticipated. Asset managers manage multiple properties, so sometimes it is awhile before you have an offer response. For investors, delays don’t impact things too much; but if you need to move soon, the possibility of an extended timeline may be an important factor in your decision.
Probably not “move-in ready”
Typically, foreclosures are sold “as-is.” That is not always a bad thing, as long as it is worth it. Typically, the seller (bank) will not repair broken or missing items—it sells as it sits. Be on the lookout for broken, vandalized or missing items and offer accordingly. The buyer may be responsible for turning on any utilities for an inspection. Even though turning on utilities is an extra cost, it is worth it so it can be thoroughly inspected by a licensed inspector. It is worth the expense and effort to know what you are buying. The likelihood of repairs being made due to inspection findings is low, but the more info you have, the clearer the picture will be on how good of a deal (or not) it truly is.
Great discounts can be had buying a foreclosed property. There are properties of all shapes, sizes and price points. It’s worth considering, as long as you know exactly what you are getting into and going in with eyes wide open.
Lisa Priest loves a bargain and is an East Texas Area Broker with Picket Fence Realty, Inc. You can reach her via phone or text at 903-948-3343 or read more at BuyPalestine.com
Buying a Foreclosure
