There are a lot of questions and misconceptions about foreclosures. You have most likely heard they are the way to go because you can get a house for cheap! It is true banks are wanting to sell their REOs (real estate owned properties), but there is a lot you need to learn so grab your Realtor and good luck!
A foreclosure home in all likelihood will be in poor condition. You can expect to have a lot of work to do if you buy one of these homes. Another factor which can be a deterrent for some buyers is that the foreclosure process can take months and sometimes over a year.
What happens during all of that time? The house sits in legal mumbo jumbo. If there are occupants in the home, they have very little motivation to maintain it or make any needed repairs...(hence the poor condition). We have seen that the owners can be very upset and take it out on the house. There are things punched, broken, ripped out, and large damage to anything they can break. On the flip side, a foreclosure can be a great investment if it is in decent shape or can be repaired to be.
After the owners are forced to leave, a foreclosed house can sit empty for months while the bank decides the price and how to sell it. In some cases the bank may go in and take care of some basic repairs, but often, the house is left as is and is up for sale.
Use a Realtor
Some banks hire real estate agents to list and market their foreclosures. These agents represent the bank so ensure your own agent to work for you. Your agent will be able to keep you informed of all of the foreclosures, possible liens, unpaid homeowner's association dues, as well as pertinent information you need to know to stay on top of the process. There may be zoning issues, or hang-ups which could affect the property.
Complete Your Pre-Qualification Before Buying a Foreclosed Property
Don’t wait to speak to a lender or broker. This can take a week or longer and you really need to have the money to cover a down payment quickly as well as money for inspections, and other unforeseen issues. You will want to be completely ready to purchase if a good foreclosure comes along.
Questions to Ask
When it is time to hire an inspector (and a contractor if you need one), a report of the property’s condition will be submitted to the lender before the loan is made.
As a potential buyer, you need to ask yourself these questions:
If you decide you want to purchase a foreclosure, use a Realtor who will work for you and guide you through this particular process.