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The ABCs Of Buying A Foreclosed Home

By Erline T. Linn

It’s in all of today’sheadlines: foreclosed homes are at their highest levels in decades. Perhaps there are as many as 3% of all U.S. homes in foreclosure today.

This can be a great opportunity to save on the purchase of a home if you are careful and take the right steps.

Step number one is to get in touch with a real estate agent specializing in these types of homes. Most lenders who have foreclosed properties hire realtors specializing in these types of properties to represent them. Often, these kinds of real estate companies will have foreclosure tours so that you can see a number of properties.

Foreclosure auctions may seem like a good notion, but you do not get to inspect the home in advance, putting you at a disadvantage. If you deal with a real estate company, the process is similar to purchasing any home, in that you can do a thorough inspection and then you will be able to determine how much you have to invest in the property.

There may be mild damage, due to the home not being cared for while it was empty, or there may be heavy damage that the homeowners spitefully caused. If there is real damage to the home, you may consider asking a general contractor to look over the home and give you an estimate on how much it will be to repair the damage.

The next step is to look at the “comparables” in the neighborhood to find out what a home like this would cost, without damage. These are the recent sales prices of similar houses. Don’t use only the sales price, since some people are still inflating their sales prices. You want to make sure you know how much the market values the home, not the seller. Next, deduct the cost of repairs from the comparable price.

Keep your bid as low as possible. Remember, if you wanted to pay full price, you would have bought a non-foreclosed home. The real estate agent will probably have a good idea of how low the seller can go. In today’s market, right now is likely the optimum buyer’s situation, a seller who does not want to own the house under any circumstances, is losing money on it, and has even more houses to get rid of.

Between the estimates and how much it will cost to repair, you will come to a fair value. Since you are looking at a foreclosure, you can to expect to get a bargain.

Be ready to borrow enough to pay for the house and the necessary repairs. If you have a lot of money to put down, keep your deposit down and use some of the cash for the repairs of the property.

You may be able to get a mortgage that covers both the purchase price and the repairs.

Next step, get a preapproval letter for your hopme loan, if feasible. This puts you at a distinct advantage in bargaining for the home.

Whatever happens, don’t consider settling, since there is a lot of property to choose from. And it will only get better for qualified buyers, since the amount of foreclosures continues to increase.

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Article Citation
MLA Style Citation:
Linn, Erline T. "The ABCs Of Buying A Foreclosed Home." The ABCs Of Buying A Foreclosed Home. 22 Aug. 2010. uberarticles.com. 8 Apr 2015 <http://uberarticles.com/finance/mortgages/the-abcs-of-buying-a-foreclosed-home/>.

APA Style Citation:
Linn, E (2010, August 22). The ABCs Of Buying A Foreclosed Home. Retrieved April 8, 2015, from http://uberarticles.com/finance/mortgages/the-abcs-of-buying-a-foreclosed-home/

Chicago Style Citation:
Linn, Erline T. "The ABCs Of Buying A Foreclosed Home" uberarticles.com. http://uberarticles.com/finance/mortgages/the-abcs-of-buying-a-foreclosed-home/


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