If you’re on the market for an affordable buy, than the foreclosure market may be a good place to start. These houses are often sold at a loss by lenders who just want to be rid of the property. But before you begin looking for your dream home among foreclosed properties, here are some things you’ll want to keep in mind.
Skip Auctions.
While an experienced real estate eye may pick up a bargain at an auction, it’s best to avoid them when you’re just beginning. Not only will you need to pay in cash, but auctions are full of traps ready to snare unsuspecting buyers.
To start off, you can’t inspect the house. People who lose their homes to the bank, often vandalize them. Any damage they’ve done, will be your problem, and you don’t know what you’re signing up for. Lenders also aren’t known to bother with even necessary repairs on the houses they’ve foreclosed on. Any damage from a leaky roof or frozen pipes will need to be fixed out of your pocket.
Secondly, hidden costs like outstanding taxes that are owed on the property are often unknown until after the house is purchased at auction. You could quickly find yourself with both a mortgage and a small army of creditors looking to getting paid.
Finally, just because a foreclosed property is up for auction doesn’t mean the previous owner has actually moved out. If they’re still in the home, it’ll be up to you to evict them from your new property. And if they trash the place on their way out, you’ll have to pay for the repairs and clean up.
Instead, choose from houses that are already in the possession of a lender.
Real Estate Owned (REO) properties won’t have any annoying previous owners to deal with, you’ll be able to have an inspection done, and the lender is responsible for any hidden expenses like back taxes.
However, even if you buy an REO property, chances are good that there will be renovations to be done. When no one lives in a home, basic maintenance isn’t kept up. Since lenders are already losing money, they aren’t going to be charitable in lowering the price because you have to make repairs. Buying a house that isn’t perfect and needs work is all part of the foreclosure game.
Are you ready to buy your first foreclosed house? The first steps are to get pre-approved and work with an expert agent! The foreclosure market moves fast, so you need to be ready to buy and have a realtor who knows where to be at the right time. If you’re ready to get serious about buying, call me today!