Interested in buying a foreclosed home? In today’s market foreclosures can be a valid option for many homebuyers. Unfortunately, there are many popular myths about buying bank-owned homes that make it difficult to really understand the foreclosure process. If you’re thinking of purchasing a foreclosed home, here are five things you should keep in mind…
Interested in buying a foreclosed home? In today’s market foreclosures can be a valid option for many homebuyers. Unfortunately, there are many popular myths about buying bank-owned homes that make it difficult to really understand the foreclosure process. If you’re thinking of purchasing a foreclosed home, here are five things you should keep in mind:
1. Foreclosure Doesn’t Equal Cheap
Many homebuyers believe that they will pay less for a foreclosed home than for a similar home that is not bank owned. Because banks want these homes sold quickly, it is true that they are usually priced slightly under comparable properties, but the key word here is slightly. A foreclosed home might be a “steal” compared to what the former owner’s once paid, but it is likely that compared to similar homes in today’s market the price is not such a steep bargain. You should also keep in mind that foreclosures often (not always, but often) need some work, so you should factor those costs in when consider price. Shop around and compare foreclosures to similar homes for sale on the open-market. The foreclosure you have your eye on might be a great deal, but don’t believe that it is just because it’s a foreclosure, do your homework!
2. Be Aware That All Foreclosures Are Sold “As Is”
Generally speaking foreclosures are owned by sellers who have never even seen the home (the bank). This means that the home has most likely been vacant for some time, and the general care and maintenance of the home has not been kept up. This could mean anything from a broken window to a leaky roof to termites or mold. Keep in mind that banks will not want to issue the buyer credits the way a normal seller would, so if you’re interested in a foreclosure you need an agent who is aggressive and experienced when it comes to working with banks.
3. Don’t Lowball
Banks understand the value of the homes they are trying to offload and it is does not make good business sense for them to accept an offer that is significantly less than market value. Think about it: if you had a million dollars sitting in a checking account, you wouldn’t sell something for $1,000 when you know if you wait for a month or two you can get $2,000 or even $3,000 – you just don’t need the money that badly! That’s the position the bank is in. Although it is true that banks do not want to own these properties, it is also true that they are not desperate enough to give them away at steeply discounted prices. In fact, they want these homes to sell at as a high a price as possible in order to cut their losses. So if you’re seriously interested in a foreclosed home, be sure to offer a fair price. A lowball offer will most likely be trashed.
4. You Can’t Cheat The System
A lot of people believe that if they can purchase the foreclosure straight from the bank before it goes on the market, they will get a better deal. However, banks have no interest in handling business this way. Why would they? It is in their best interest to get the best price for the property and that means putting it on the market and seeing what kinds of offers come in. If you really want to purchase a foreclosed home before it hits the market, you’re going to have to pay cash at auction.
5. Get The Home Inspected
Many people believe that buying a foreclosed home means that they have to forego inspection. It’s true that if you’re buying the home at auction you will not have the opportunity to have it inspected, however if you’re purchasing a foreclosed home that is for sale on the open market you can and should have that home inspected. Even though you will be responsible for paying the inspector and fully funding any repairs that need to be made (if you go through with the purchase), it is ultimately in your best interest to have the home inspected.
Are you in the market for a new home, foreclosed or otherwise? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266!