With the housing market still down, and foreclosures common, many people wonder should you buy a foreclosure or not? While you can save a lot of money by purchasing a home that has been foreclosed on, it is important that you know how to buy a foreclosure to avoid pitfalls.
The two main issues with purchasing a foreclosed house is that you are not always able to inspect it before you purchase it. Additionally, if there are people living in the house when you buy it, you are responsible for evicting them. However, by using an experienced agent, you can avoid many of the problems associated with purchasing a foreclosed home.
To begin with, you should look for a real estate agent that has foreclosure experience. It is important that you have someone on your side that has worked on these types of home sales to ensure that your purchase goes as smoothly as possible. Additionally, many real estate agents that routinely work on foreclosures have relationships with banks, and they are able to get information about homes before they are listed to the public.
Once you have selected a real estate agent, you should get preapproval for a home loan. You can get a letter from a lender, which explains how much money you will be able to borrow. Since many foreclosures are sold quickly, if you are waiting for loan approval, you may miss out on a great deal.
Additionally, it is also important to factor the costs of repairs into your bid. Sometimes foreclosed houses have extensive damage and are expensive to renovate. If you are not careful, you could end up spending tens of thousands of dollars more on your new house than you expected.
Additionally, when bidding on a home, look at the pricing and sales rate of other homes in the area. While there are not always other foreclosures in the area for comparison, you can at least get an idea of what homes are valued at where you are looking. Additionally, if you find that homes sell quickly in the area, you will want to bid quickly and accordingly to keep from missing out on a bargain.
Purchasing a foreclosed house is a great way to save money, but it can be a complicated process. Having an experienced real estate agent can make the difference between a quick and easy process and a trying one.