Tips On Buying a Foreclosed Property
In today’s economic crisis the amount of foreclosures across America is at an all time high and no one has any idea when the housing crisis will get back on its feet. For individuals who have not been affected by the economic downturn and can still afford to purchase a new home, there may be some excellent advantages that come along with purchasing a foreclosed property.
Most investors are actually willing to sell these properties for as low as 20% below the fair market value. This is mainly because investors are looking to recoup losses and to get a new borrower in the property as soon as possible. Homes that have went into foreclosure can also be damaging to the surrounding area and can eventually cause home values in their neighborhood to decline. To prevent this from happening lenders advertise these properties at great prices to attract new buyers.
However, this may sound like the deal of a lifetime but be aware that there are also some complications that will come along with this transaction. Below are four tips to help you successfully buy a foreclosed home:
1. Avoid buying the home at auction. There are quite a few safe ways to buy a property that has been foreclosed, but this is not one of them. The reason why it is not wise to bid on a home at court auction is because you will have no inspection of the home or even get to see it before the purchase. You will not be able to inspect the house for needed repairs so you can really find out how much money you will be investing. Many times you will find that these homes also owe taxes, which is another problem transferred to the new owner.
One of the best ways to purchase a foreclosed property is to wait until the property is placed back onto the market. These homes are now referred to as real estate owned (REO) or bank owned properties. The bank takes care of all the existing debt and taxes on the property before it is placed for sale on the market. Also many times they will fix any needed repairs to make the home presentable.
2. Finding homes that are currently in foreclosure. It is very easy now to do this thanks to the internet. You can find quite a few sites right here online that will list all of the homes in foreclosure in the area in which you wish to purchase. Also HUD provides a list of FHA foreclosures they have fore sale and Fannie Mae as well. There are now many sources for finding these homes so you should not have any problems locating a home in a timely matter.
3. Make sure you do your own research to find the true value of the property. Since early 2007 home prices began to fall dramatically from previous years when the market was at its peak. Now because of this the majority of Americans owe much more on their mortgage than their home is actually worth. To get a good estimate on the homes current value all you need to do is research other property values in the area. Get comparisons from other similar homes in the neighborhood to see what they are selling for. This has got to be the quickest and most simple way to verify ou are not getting ripped off on the deal.
4. Get the home inspected before you make the purchase. You will want to get the property inspected no matter what, even if it seems brand new. Doing this is crucial when it comes to buying this type of property. The previous homeowners had trouble paying their mortgage so there is a great chance that they put off regular maintenance also. There are even cases were the homeowner was so upset about the foreclosure that they just try and destroy the home before they are forced to move. If you do not get an inspection done you will not be able to get a a good estimate as to how much money you will be spending on repairs.
If you follow the tips above you should have no problem finding an REO home that fits your needs. You may also score the deal of a lifetime choosing a property that has been foreclosed!