Crucial Steps For Buying a Foreclosure

June 2, 2017 Facebook Twitter LinkedIn Google+ Online Auction

Today many home buyers are moving away from purchasing regular resale homes in favor of buying foreclosures in the hopes of saving money. While a foreclosure can definitely provide the opportunity to save money on the purchase of a home, there are some things you need to keep in mind when buying a foreclosure, as the process is somewhat different from a regular home purchase.

One of the main differences that you will see when buying a foreclosure is the involvement of only one real estate agent. In a regular home purchase, there are typically two agents involve; the listing agent and the selling agent. In addition, in a foreclosure situation, the seller is going to be more prone to requesting a pre-approval letter from the buyer’s lender prior to accepting an offer. You should also know that unlike in regular home sales there is often little opportunity to negotiate the sales price. Finally, the home is most often sold as is. This means the buyer will be responsible for any necessary repairs.

While there are definitely differences involved in buying a foreclosure, there are also many advantages to such a purchase. For example, most foreclosures are vacant. This means that the process of moving in can be much faster than in a home where the seller will need to pack up and move out before you can move in.

Keep in mind when buying a foreclosure that the process may be more involved. In exchange for the great price, you must be prepared for the fact that the first home you write an offer on may not be the home you actually buy. There are numerous foreclosures on the market right now. In fact, it is estimated that about one-third of all sales nationwide are distressed properties; short sales and foreclosures. Although there are plenty of properties available, the process of buying a foreclosure can sometimes involve going through several properties until you find one that will meet your requirements, your lender’s requirements and where you can reach an agreement with the bank that owns the property.

There are some things you can do to make the process easier. First, make sure you locate a real estate broker who will work directly with banks that own foreclosed properties. Second, you should make sure you receive a pre-approval from your lender. The pre-approval letter will specify the amount of money you can borrow for the purchase. That amount will be based on the assessment the lender makes regarding your income and credit score, so you should be prepared to provide documentation regarding income and debts to the lender. Also, know that the lender will pull and review your credit score in order to make a determination regarding your loan application.

Many buyers make the critical mistake of shopping for a house first and thinking they will work out the financing after they have found a house they love. This creates a distinct problem with bank owned properties, which tend to sell much faster than other properties. This means that you very well may not have enough time to work out the financing after you have found a house you love. To avoid this kind of problem, you need to make sure you get preapproval mortgage and have everything worked out with your financing first.

Do not assume that the bank that is selling the property will offer financing for the purchase. The bank looks at the transaction as getting rid of a property they are losing money on. As a result, they may or may not be willing to offer financing on the purchase of the same property, so don’t count on it.

Once this is done, the next step is to make sure you do some research to understand the foreclosure market in your area. Be sure you know about how long foreclosed homes in your price bracket remain on the market in your area. Also, find out as much as you can about the sales prices of foreclosed homes in the area that interests you so you will be fully prepared.

Finally, take into consideration the fact that the property is being sold as is when looking the price. Just because the home needs repairs does not mean the bank will accept a lower price, but you should make sure you can still afford the home at the current price along with the necessary repairs in order to make sure you do not go over your total budget.

Andrew owns a website that provides many Home Buying Tips. You can visit his website at: