In 2020, there were 214,323 foreclosure cases in the United States.
Foreclosure listings are often priced lower by the banks that now own the properties.
Many people buy foreclosure houses for investment reasons or to save money on a new home.
So keep reading for 10 tips to buying a foreclosure home today!
- As-Is Property
When interested in foreclosures for sale, you must understand that they’re sold “as-is.” This means that the property will be sold in its current condition. Remember this because it does not matter if some damages or repairs need to be made.
If you’re okay with taking on a project, a more weathered home may be a great option for you. Oftentimes, these distressed properties for sale will be held at a lower price point, making them more appealing to potential buyers.
- Set Your Budget
Setting your budget is more complicated than just deciding how much you want to spend on a home. Many other factors need to be calculated into your budget.
First, remember all of the extra fees and costs you’ll have to pay when buying a home. These extra costs include closing costs, inspection fees, and immediate repairs. Depending on the property, this could cost thousands of dollars.
After you’ve calculated that amount, you’ll need to set a maximum spending price on the home itself. Set a realistic budget and stick to it to avoid overspending.
- Loan Approval
Foreclosed listings are real estate-owned homes, meaning they are owned by a bank. The bank that owns the property might seem like the perfect place to go for financing. However, the same bank will not provide you with a loan.
You’ll need to have financing before showing interest in the property. Find a reputable lender that matches your financial needs.
Then, you’ll need to get a pre-approval letter to show the bank you’re a serious buyer. Get this letter as soon as possible since foreclosure homes don’t last long on the market.
- Real Estate Agent
Since foreclosures sell quickly, it’s a great idea to get a real estate agent who knows the market well. Gather a few different agent options and pick the one who you feel the most comfortable with. This will help you communicate with your agent on exactly what you’re wanting or needing.
A good real estate agent knows the foreclosure process well and will help you stick to your budget. Oftentimes, real estate agents know about pre-foreclosures and can give you insight into what’s not yet listed on the market.
- Vacancy
If you find a home you’re interested in, you need to know how long it has been vacant. Long vacancies commonly mean the house has more wear, erosion, and problems. While being vacant, there is usually no upkeep for the home and things deteriorate quickly because of this.
Look for vacancy signs to help make your decision on a purchase. Overgrown landscaping, mildew, or broken windows are all signs to keep in mind.
- Winterized
Winters can be harsh on homes, especially when the homes have not been properly winterized. When homes are foreclosed, they’re often left to sit with no winterization. This can be detrimental to the foundation and structure of the home.
Broken pipes are the biggest concern since they can flood the house. If the water was left on during a freeze, the home could already have severe water damage. A proper inspection will be the only way to tell if the pipes have burst.
- Neighborhood
Like with any home, you want to check out the neighborhood. The location of the home is important for your family and value purposes.
Spend some time in the area to see what businesses, noises, and people can be found there. This will give you some insight into what to expect if you purchase the home.
- Inspections
In the real estate market, inspections are crucial for so many reasons. They can keep you from buying a severely damaged home and save you money in the long run.
Homes must pass certain inspections before being sold, but it’s a good idea to get another one to further investigate any problems.
- Research Other Homes
The bank has a set price for a foreclosed home, so it’s sometimes hard to find out the proper value of it. Researching the area you’re interested in can give you a better idea of the value of the home.
Look at other homes for sale in the same area and make sure they are of similar size. Generally speaking, this should be in the same price range as your home’s value.
Foreclosed homes are not usually negotiated in price, but any effort can help save extra money.
- HUD HomesÂ
A HUD home is backed by a government mortgage. So HUD foreclosed homes are a great place to start looking for a property. They are all listed on the HUD website, making shopping in your area easier overall.
These homes can potentially make great deals but act quickly. HUD homes move off the market fast because of their low price points.
If interested in this market, you must have a realtor. They can then place a bid on the property you’re interested in.
Save Money With Foreclosure Houses Today!
Hopefully, all of these tips will help you understand the process of foreclosure houses better.
When it comes time to buy, you’ll be fully prepared and know exactly what to expect.
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