Should You Buy a Foreclosure?
Everyone likes a good deal, especially when buying real estate. Many buyers may consider looking at foreclosures as a way to boost their buying power and score that “deal.” These are properties that have been repossessed by the lender due to non-payment by the previous owners. The lender then takes ownership of the property and puts the home for sale to try to recoup the money they have invested in the loan and legal fees. Discounted properties are great, but foreclosures are not for everyone. Keep these things in mind if you’re thinking about buying a foreclosure:
Many foreclosures are priced under market value and are very attractive to home buyers. Of course, the lure of that cheaper price may be a great reason to buy, but there may be other costs associated to consider as well. The price may be great for that neighborhood, but not if you will be over-invested after repairs.
Typically, foreclosures are 100% as-is. That means that the bank does not repair any broken or missing items on the property. What you see (and even what you can’t see) is what you get. As you can imagine, the previous owner wasn’t in the best frame of mind when vacating the property, so there may be damaged, vandalized or missing components. Factor these repairs into your offer, because you will be responsible for them if/when you buy it. If you can, include an inspection contingency with your offer. The buyer may be responsible for turning on any utilities for an inspection. Yes, this is a pain, but it is worth it. An inspection on a bank owned home will be mostly for informational purposes, as they likely won’t do any repairs; but the more information you have, the easier your decision will be on whether or not this is the “deal” you thought it was.
Unlike a traditional purchase, a foreclosure typically has a longer time frame before closing. I’m not going to lie, it can be frustrating, even when you know it will be slow going in. Asset managers for the banks manage many properties, so sometimes it is awhile before you have a response to your offer. For investors, this is less of an issue; but if you plan to live in the property, the time to closing may be an important factor in your decision.
The best advice on making an offer on a foreclosure is to come with you strongest offer. Many foreclosures receive multiple offers because the lower prices are like buyer magnets. Keep in mind, there are no emotions in this deal, the seller is a bank and is only looking at the numbers and for the offer with the highest likelihood of closing. To improve the chances of your offer being selected, bring your best offer, avoid a bunch of contingencies, offer the fastest closing you can and show proof of funds or preapproval. You may only have one shot at it, so be sure it’s a strong one!
Foreclosures can be a great way to buy a property at a discount. The buying opportunities span the gap of all price ranges and all conditions. It may be a great fit for you, or it may not; but you never know until you go look. Before you fall in love with a foreclosure, make sure that you are ready to travel down the sometimes bumpy path.
If you’re interested in a Palestine, TX foreclosure or would like to see the current foreclosures on the market, feel free to call/text or email me and we can start your search!
Should You Buy a Foreclosure? –The choice is up to you!
Lisa E. Priest loves a good deal 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