Wondering how to buy a foreclosed home? Undoubtedly, foreclosures offer some of the best deals when you want to buy a home. But before diving headlong into buying a foreclosed home, you need to know what to expect and how to go about it. This is help manage expectations and enable you to identify a good deal as these homes do not come in pristine conditions. Here’s how to go about it.
Do Your Own Checking
Whether it is a mansion or condo, you need to do some due diligence on the home before making any commitments towards making a purchase. Before you make an offer, make sure that there are no outstanding liens, taxes and loan arrears on the home. Also, check for unpaid homeowners association and secondary liens dues. Get title insurance in case you missed some unsettled dues when purchasing the house.
Make Your Move Quickly
Foreclosure homes are eye candy for real estate investors. This is because the buy-in rate is favorable. With a little renovation, the house can be placed back on the market for its actual market value. Take advantage of the grace period where potential occupants are given to close the deal before it is made available to investors. Different real estate companies have a varying grace period, normally 60 days before the home is available to investors.
Get A Home Inspection Done
Because foreclosure homes are sold on an ‘as is’ basis, there are more often than not underlying issues that need serious repairs. Lenders do not bother to make these repairs. This is why foreclosure homes go for less than their actual market price. Once you decide you want to close the deal on a foreclosure, get the property thoroughly inspected before making your final offer. There are no seller disclosures since the lender has never lived in the home. The seller disclosure agreement will state that the buyer is responsible for any repairs or replacement the house may need and that they are free to hire an inspector.
Find the Best Foreclosure Homes
Since you are definitely trying to save money, finding the best deals on foreclosure homes is the best way to do so. Look out for HUD homes. These are homes that were foreclosed because the previous owner was unable to meet their FHA payments. You need to find a real estate agent who will place a bid on the home on your behalf. You may be asked to make a cashback down payment of a percentage as closing costs.
Have Some Money for Repairs
If you are interested in investing in foreclosed homes, you need to have money for repairs. Some homes require minor repairs while others need a complete makeover. This mostly depends on how the precious homeowner cared for the property. Therefore, having some money available for possible repairs is a good idea. You might also want to get a contractor to look at the home to get an estimate of the amount you might have to spend to get the home back in shape.