We know that finding an affordable home isn’t always as easy as it sounds, especially for those who need larger spaces, plenty of land or other specific criteria. One way to obtain a dream home, yet still afford it, is to purchase a foreclosure. These homes need work, but buyers get a great deal to compensate them for the inconvenience. We’ve compiled a few basic tips to help buyers avoid common foreclosure pitfalls and smooth the way to homeownership.
Use a Qualified Agent
If you are only interested in foreclosed homes, choose an agent that has experience with buying foreclosures. These agents have often developed relationships with the banks and mortgage companies and know about homes before they are even listed. They also know which ones have been in foreclosure before, which means you should avoid them.
Getting pre-qualified for a mortgage is a must when buying a foreclosure. There are often multiple buyers bidding on the home, which leaves no time to arrange financing later. A pre-approval letter goes a long way in getting your offer accepted. Additionally, don’t assume that the bank that owns the foreclosure will offer financing. The bank is focused on getting rid of bad debt, and won’t offer special exceptions on mortgages to do it.
Examine it Closely
Some foreclosures are sold without the buyer even seeing them, which is always a bad idea. Without looking at the home or having it inspected, buyers could face structural damage or expensive repairs. Another pitfall is relying on previous inspection reports. Unless the inspection was performed recently, buyers should consider it out of date. The longer a house is empty the more problems that develop.
Don’t Submit Low Ball Offers
Some buyers mistakenly believe that foreclosed home prices have a lot of room for negotiation. That simply isn’t true. Your offer should be in line with other comparable homes in the area, which a real estate agent can help with. Remember that if there are multiple bids on the home, you won’t get a chance to negotiate if your initial offer is too low.