Learning how to buy a foreclosure is not all that different from buying any other home – but the small differences can make the difference between getting the property you really want and be left with nothing.
How to Buy a Foreclosure
When you’re ready to buy a foreclosure, a checklist is always a good idea to make sure you don’t overlook an important step in the process.
Financing – When you’re ready to buy a foreclosure, it’s best to get pre-approved from your bank or mortgage lender. This will make it easier to select a home because you’ll know how much you’re able to borrow. You’ll also be in a better position to negotiate price, which can be very important when buying foreclosures.
Real estate agent – Finding a real estate agent should be next on your checklist. An agent can help you find the right home for your needs, and can also help you navigate the process of buying a foreclosed home. The best agent will have experience helping homeowners buy foreclosed homes.
Property research – Researching homes of interest may be the most important step on the buy a foreclosure checklist. If a home has set empty for some time, it might have structural damage or be vandalized. You should always view the property in person so you have a clear understanding of the condition of the property. A home inspection provides a clear idea of how much work needs to be done to get the house up to code. Remember even if you get a house at a rock-bottom price, the cost of necessary repairs might mitigate your total savings on the foreclosure purchase.
Sale offer – Once you’ve found a home you love, make an offer. Foreclosure homes can go quickly because of the low prices, which are often below market value. Your real estate agent can guide you through negotiations. The process to buy foreclosure properties is slightly different than what you might expect. Many common negotiation tactics, such as asking for a discount to do necessary home repairs, don’t apply to foreclosures, so make sure you understand which points can be negotiated.