What to Consider before Buying Foreclosed Properties

Posted by MoneySavvy on May 27th, 2010 | no comments home title

As is important in any major decision-making process, you can expect to do a ton of research before deciding on purchasing a foreclosed property. Knowing the ins and outs of the market will give you a leg up when dealing with this type of decision. You also need to have a thorough understanding of the market itself and ways to plan ahead.

Some ways to be prepared:

You can never know too much. Do as much research as you can handle, and then do some more. Look at multiple properties and have a budget ready.
Be sure you are pre-qualified. If you have financing secured, you will have a better chance of finding a home that fits your needs and your budget. Doing this also gives you more power to bargain when it comes time to make an offer on the house. It looks better to come prepared.
Find a lender that has a lot of experience in dealing with foreclosed properties. This will help you find the right property for the right price and you can be sure that there would be fewer mistakes or confusion and you will be more likely to find a great deal.
Learn as much as possible about the foreclosure buying process. The more you know about what you are doing, the better your chance will be at finding a great deal. If you are buying the property through an auction or using a real estate agency to bid on the property, you will have more power to bargain if you understand how it works.
Research doesn’t stop at having a list of properties you are interested in. It is also worth looking at the surrounding neighborhoods, public and private schools, the rate of property value growth, career and recreational opportunities, the average value of the property in that area, and the population. Working with a realtor can help you obtain this information and teach you a lot about that area’s housing market.
Check out the properties in person. Don’t just rely on a nice picture and a few descriptions. Go and see it for yourself. You may be able to schedule an appointment to view the property or attend an open house. Examine the house as thoroughly as possible. Investigate every nook and cranny. You wouldn’t want to find out after purchasing the property that there was a major problem that would cost you lots of money or even prove a danger for you and your family.

Keep an eye out for rodents, issues with plumbing and heating, structural damage, and termites. Make sure that all the features that were outlined in the listing of the property are truly available. It is also important to ask tons of questions before making a decision.

Once you decide that you like a property and you have a really good idea of what it is worth, it’s time to make a bid on it. There is always room for negotiation. Just keep in mind your budget and avoid getting scammed. Depending on the process by which the home is being sold, you will more than likely be working with many professionals. Keep this in mind.

Purchasing a foreclosed property can be very beneficial and much cheaper than buying a home fresh on the market. Just remember to always be prepared.