With property rates at an all-time high, finding an affordable home that fulfills one’s requirements is a significant challenge for many. That said, leveraging the right real estate strategy can help one secure a comfortable home at a reasonable price. Buying a foreclosed home is one such strategy that many aspiring homeowners opt for. Such properties are lucrative investments for those looking for a permanent home or investing in real estate to earn long-term profits.
Real estate foreclosure
When a borrower purchases a home, the lender requires the borrower to return the borrowed amount within a specific timeframe. But if the borrower fails, the lender has the right to “foreclose” or mortgage the property and sell it off. As a result, foreclosed property is usually offered at a highly reasonable price, making it an affordable real estate investment for buyers.
Tips to remember when buying a foreclosed home
There are a few things that buyers need to keep in mind when buying a foreclosed home.
1. Look for a reputed real-estate agent
While it is possible to find real estate foreclosures independently, hiring an agent makes the process much more streamlined and hassle-free. Besides that, experienced real estate agents know the market well, so they can understand one’s requirements and find suitable foreclosed properties from credible sources.
That said, when shortlisting a real estate agent, one should ensure that the professional has considerable experience in real estate, specifically in foreclosures. Additionally, request a license from the agent to confirm their authorization. Finally, it is a good idea to check out the ratings and reviews of the agent or agency online.
2. Understand where to find foreclosure sales listings
Different financial institutions and departments in the country offer foreclosed homes. Knowing who offers them can help one locate them better. It is crucial to know where each institution lists foreclosures for sale. For example, many prominent banks in the country post these listings online. The U.S. Department of Housing and Urban Development (HUD) also lists its foreclosed property sales on its website. That said, a local multiple listing service can also list foreclosures, and their sales typically move quickly, so it is important to monitor all these portals regularly.
3. Secure a pre-approval letter
Getting pre-approved for a loan to buy a foreclosed home helps expedite the process. Additionally, it prevents the need for large down payments or prolonged waiting periods for the approval of one’s application. Pre-approval for a mortgage usually takes about a week to 10 days. But having all the required documents, such as proof of income and tax returns, ready in time can help speed up the procedure.
4. Visit the place and inspect the property thoroughly
While a foreclosed home may look comfortable—even lavish—and available at an affordable rate, it is important to personally inspect the property to ensure it is in good condition. Also, checking out the home helps ensure that all the details regarding the available space and rooms are accurate.
Before moving in, one should carefully inspect the property in broad daylight, preferably turning on all the utilities, and keep an eye out for any leaks, cracks, or damages that need repair. If the damage is irreparable or would be too expensive to rectify, it’s best to look for another foreclosed home.
5. Avoid buying a home that’s not been occupied in a long time
One way to understand the condition of a foreclosed home is to verify the duration for which it has been vacant. The longer a foreclosed home remains unoccupied, the greater the likelihood of damage or shortcomings. It is beneficial to find out why none of the previous prospective buyers zeroed in on the property.
6. Bid well for the property
One of the most important things to remember when buying a foreclosed home is that the bank loses money for each day it holds onto the property. So, it is highly likely to settle for a negotiated amount that suits the buyer’s budget, as the bank has no sentimental value for the property. For these reasons, it is important to set up a good bid when buying a foreclosed home. To achieve this, one should set up a fixed budget for the property beforehand, taking into account one’s purchasing power and income levels, and propose one’s budget limit to the seller well in advance for negotiation.
Buying a foreclosed home is a great idea to secure a comfortable home at a highly affordable rate. That said, one should research the institution offering the property well, find a reliable broker, and set a definite budget limit to get the best real estate foreclosure deals.
