IS PURCHASING A FORECLOSURE RIGHT FOR YOU?
If you're like many prospective homeowners, you're intrigued by the possibility of purchasing a foreclosed home. After all, they frequently come with attractive price tags. However, buying foreclosed homes isn't for everyone, and there are lots of hidden issues that the average homebuyer generally isn't aware of.
Following are three things you need to know about buying a foreclosed home.
They Often Require Significant Repairs
One of the biggest dangers of buying foreclosures is that they are often in serious states of disrepair. If you're got substantial remodeling and construction skills along with the necessary amount of time required to do the majority of the work yourself, you might be able to come out ahead by going this route. Be sure to hedge your bets by having a thorough inspection performed prior to finalizing the sale so that you don't encounter any unexpected surprises.
They Can Save You Money
Foreclosures are the property of the financial institution that held the loan when the owner defaulted, and the goal of the bank is to recoup as much of their financial losses as possible. For this reason, these properties are often listed for as much as 5% below market value. The key to saving money is to research repair and renovation costs and compare them to the amount you stand to save on the purchase price. In some cases, it's worth it, and you may be able to use inspection reports and repair estimates to leverage a lower price. However, keep in mind that financial institutions generally aren't as open to negotiating price points as their private seller counterparts.
Experts counsel that the best strategy for successfully purchasing foreclosures is to put your best offer on the table instead offering a low price and expecting a counteroffer. The bank agents who handle these properties aren't real estate professionals, and in many cases, they're handling serious backlogs that don't leave them with much time to spend hammering out agreements on individual properties. Be sure to submit repair estimates with your offer if you want them to be taken into consideration.
They May Be Good Bargains for Investors
Foreclosed homes can be good investments for those with plenty of real estate savvy. By the same token, if you are thinking about flipping homes, buying a foreclosure might be a good way to start. Even if you fail to make a profit with your first foreclosure, the learning experience could prove to be invaluable if you plan on making future investments in real estate.
Your local real estate agent can provide you with information on buying a foreclosed home in your area. Like any other real estate transaction, making a decision that's best for you depends on being armed with as many facts and details as possible. Also, keep in mind that whether foreclosures are a viable option highly depends on your individual situation. It's essential to understand the possible dangers of buying foreclosures and go into the transaction with your wide eyes open.