Buying a foreclosed home on the surface appears to be as straightforward as buying a home in the traditional real estate market. However, the market of foreclosures is more complex under the surface requiring careful navigation if you hope to find a terrific bargain on a foreclosed home.
Begin Your Search with Information
Rather than jumping into auctions and foreclosure listings, do a bit of research on what is required in your state for a foreclosure sale. The legal aspects of buying foreclosures vary by state and some states require steps far outside the traditional buying practices. Foreclosures are legal proceedings and are treated as such. For example, in certain states the lender must actually sue the borrower to get a court order to sell the property. While this is on the selling end, the legal aspects can certainly present hurdles to buying the home through the bank as well.
Focus Your Search for Foreclosed Home
When you begin actively searching for foreclosed homes, do so with clear criteria in mind. In many areas where prices rose the highest during the accelerated years of real estate, home values have fallen significantly thanks to the huge number of foreclosures coming onto the market. In these areas especially, it is easy to become overwhelmed with the sheer number of choices when considering a property. Knowing what you’re looking for ahead of time will make the search far more productive for you and your real estate agent.
Are you able to renovate the foreclosed home? Many properties that have undergone foreclosure spend years in bad states of repair. The owners, struggling to make mortgage payments, didn’t have funds to spend on improving the property in most cases and there are often substantial cosmetic repairs and replacements to handle. In some cases, there are large structural problems as well from years of neglect and even intentional mistreatment. If you’re looking for a turn-key property, you’ll have a bit tougher search, but knowing what your improvement limits are area ahead of time can certainly make things easier.
How much can you spend? There is occasional flexibility with foreclosed homes, but with the already reduced listing price, in many cases, you don’t have that much wiggle room when it comes to pricing. Have a set number in mind and unless a foreclosed home has been on the market for some time, plan on paying close to the asking price unless it is priced higher than the comparable sales in the marketplace. Your real estate agent can help you determine these values.
Where do you want your home to be located? In some areas such as certain cities in California where the foreclosures are rampart, you have options when it comes to seeking properties coming onto the market. Ask your real estate agent to focus her search on properties in a certain subdivision, or even a certain street to ensure you’re getting the best location you can. You can aid this search by continuing the gather information about the area. If you’re watching an area closely, you might be able to buy a home from the original owner before foreclosure proceeding begin, but be ready to tackle the liens that are often on the properties as well.