Understand the Process: Tips for Buying a Foreclosed Home

Buying a house that’s in foreclosure sounds great, right? It can save you big money, but it’s not an easy process. These tips for buying a foreclosed home will help you understand what you’re in for.

A Different Deal

In a typical home sale, there are usually two different agents involved, with an inspection process and negotiations. Pretty standard. With a foreclosure, you only interact with one real estate agent, and because the house is bank-owned, you don’t have any real negotiating power. It’s an as-is sale, which means no inspection, and you’ll have to pay for repairs.

Get Pre-Approved

Foreclosures usually have many competing offers, so if you want to get in on the action, getting pre-approved is the first step you should take. Before you even start looking, have a lender write a letter that clearly states how much money you’re approved to borrow. There’s no time to do this when the offers start coming in.

Find an Expert

Align yourself with an agent who specializes in foreclosures, so you don’t lose out because of rookie mistakes. An agent who has relationships with banks that own homes in foreclosure is a huge asset. That agent will know about homes about to be sold before the public does. If you filter your searches on real estate websites for “bank-owned” or “real-estate owned,” you’ll see who the players are.

More Research

Research the comps in your area to see what houses are selling for and how long it takes. These facts will help you be realistic with your expectations. Pricing depends on the pace of sales in that market, so see how long it takes for homes to sell in the same neighborhood and/or price range that you’re looking in.

Your Offer

Foreclosure prices are lower than in a typical sale, but you’re still competing with other people who want the house. Just bid the amount you would be willing to pay after the back and forth negotiation in a regular home sale. In the end, you don’t want to feel like you paid too much, but you don’t want to regret not offering a few thousand dollars more. You can always explore options for getting through a cash crunch. These tips for buying a foreclosed home will help you navigate the process like a pro!