1) Get Expert Advice – A good real estate agent can tip you off to the challenges you could run into with a foreclosed property. Every state has unique laws and regulations concerning foreclosures. It would be wise to consult with a real estate attorney who specializes in foreclosed homes before taking the plunge. Not only will these experts provide sound advice, but they also can help you navigate through the red tape of closing the deal.
2) Get Ready To Hunt – A foreclosure happens when a homeowner can no longer make their mortgage payment and is forced to forfeit the home back to the bank. Many factors can lead up to the foreclosure, but it’s important to note that not all foreclosures are good deals. Some can offer more trouble than the low price tag is worth. Be as selective with your search as you normally would. Research the neighborhoods you want to live in and be extremely critical of the area and the surrounding homes.
3) Determine the Property’s Worth – Once you think you may have found your perfect property, check the county assessor’s office to determine ownership and pricing information. You should also be able to obtain tax information. All of this will help you determine the home’s potential worth.
4) Shape Up Your Credit – Check your credit report and make sure your score is in good shape. Banks and lenders are particularly sensitive to credit issues in foreclosure situations.
5) Get Ready For Repairs – Write down your budget for repairs after purchase. Now double it. As a safeguard, that’s about what you should prepare to spend on repairs in a foreclosed home. Find out how long the house has been unoccupied and determine if the previous homeowner performed routine maintenance on the home. Beyond your personal opinion of the home, getting a certified inspector to tour and inspect the property is a MUST in a foreclosure situation. You should prepare yourself for the worst so you don’t face unwelcome surprises.
6) Get Pre-Approved – Have all of your financing in order before you being searching for a home. Discuss your options and plans with a Home Loan Expert in order to put together a solid financial package to present when making an offer.
Knowing what you’re getting into, preparing for what could be a long process and not being afraid to get your hands a little dirty are the first steps in buying a foreclosed property. If the home is located in a great neighborhood, investing in a fixer-upper could be worth the money.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.