Are You Interested In Buying A Foreclosed Home?
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It's in all of theheadlines: foreclosed homes are at their highest levels in years. By some estimates, nearly 3% of all of the homes in the United States are vacant or foreclosed.
Purchasing a foreclosed house can be a real bargain and a great investment if you know how to proceed properly.
Step number one is to get in touch with a real estate agent specializing in these types of properties. The lending institutions that have inventories of these homes usually work with their own real estate agents all the time. You might even be able to take a foreclosure tour with one of these specialized real estate agents.
This is a better answer than bidding at auction, where you often do not get to look at the property before bidding. With an agent, you have the chance to walk through the home, ask questions, etc.
Many foreclosed homes have suffered damage, either light damage just from being abandoned, or serious damage, perhaps even inflicted by disgruntled borrowers. If there is real damage to the property, you may consider asking a general contractor to look over the house and give you an estimate on how much it will cost to repair the damage.
Just as you would with a non-foreclosed house, know in advance what the "comparables" for the area are. Comparables are the listing of recent sales of properties in the immediate region. One warning: use the actual sales price, not what the owners were asking. You want to make sure you know how much the market values the home, not the owner. Now, you can deduct your costs of repairs from that price.
Bid low, in the beginning. There is no reason you should bid the asking price, or you wouldn't be shopping for a foreclosed home. The real estate agent can give you some indication of the range the seller will consider. In any buyer's market, this is probably the ultimate buyer's market: the seller has absolutely no interest in owning this house, is losing money on it every day and probably has a lot ofothers he is trying to dispose of.
Based on the comparables and the estimated repair costs, set a maximum bid in your head that you are willing to offer, and don't be persuaded to go higher. Since you are working with a foreclosure, you have to expect to get a bargain.
When you apply for a loan, make sure you have enough money to cover the repair estimate in addition to the purchase. If you have a large deposit available, consider lowering it to retain funds for the repairs.
A HUD 203K loan is an interesting possibility for borrowers of foreclosed properties, since it will give you a mortgage to cover both the purchase price and the repairs.
If you can, get a pre approved mortgage before you begin to look for the foreclosed homes. Having a pre approval letter gives you a real advantage in negotiating, especially if someone else is bidding on the home.
Just keep in mind that there are lots of foreclosures today, so there is no need to overpay or to settle. The more qualified you are as a buyer, the easier it will be to get your dream home at a bargain price.
Article Source: Articlelogy.com
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