Buying a foreclosure

With the current  “perfect storm” of low interest rates and low prices there has never been a better time to buy a home. 

One of the best places to make that investment is in foreclosed properties. They are truly the bargain of residential real estate. Buying a foreclosed property has many of the same facets as buying a regular for sale property. But there some differences. The differences include:

·         Banks sometimes take longer to respond to offers then a traditional seller.

·         There may be different forms required by the bank or their attorney.

·         If the property is winterized it will need to be dewinteried to do an inspection of the property. The cost of the dewinterization is usually the responsibility of the buyer.

·         The bank will probably be selling the property “as is” and therefore will make no repairs.

·         The amount the bank was owed usually has no bearing on what they sell it for. The sales price is based on an appraisal and on a BPO (broker price opinion) performed by a local broker on behalf of the bank.

·         The home may not qualify for all available types of financing. 

The current market conditions also make it a perfect time for a small investor to purchase one or more foreclosure properties for rental or resale (flipping). During economic downturns, more upscale homes go into foreclosure, so the notion that foreclosure homes are only available in crime-ridden areas is inaccurate.

Just because a home is a foreclosure property it does not mean that you can pay pennies on the dollar for a property.   Although you can buy some as cheap as 30-40% below market value that is not the norm. Somewhere from 5-10% is more likely.

Every situation is different. It pays to hire a competent professional to help in your search and contract negotiations. Contact us if you need someone who will work on your behalf or if you need more information about local foreclosures.    Our services are free to you.