Buying a foreclosed home can be an affordable option for both homeowners and real estate investors. However, there are a few things every buyer should know before purchasing a foreclosure.
What you see is what you get. Foreclosed homes and properties can be found in a variety of conditions. Previous homeowners may have stripped the home bare of appliances and fixtures and may have even intentionally damaged parts of the home. As the buyer, you will be responsible for taking care of any repairs to the property, so be sure to keep this in mind when you make an offer.
Prepare for a long process. Usually buying a bank-owned property is a long process. Contracts will be written to protect the interests of the bank and to protect the institution from any lawsuits. The bank may even require you to use a specific title company. Even if you have purchased a home before, purchasing a bank-owned property will likely be a very different process.
Consider vacancy length. Some bank-owned homes have been empty for a while. The longer the home has been vacant, the more likely there is to be damage. If the home has been vacant for quite a while, plan for issues like bugs, sewer problems and plumbing issues.
Get a private inspection. Don't rely on previous inspections. Be sure to get an updated report on the condition of the home. This will help give you an idea on what kind of investment you will need to make on immediate repairs.
Get an expert on your side. Buying a foreclosure can be confusing and complicated. An experienced real estate agent who has knowledge about purchasing a foreclosed property can help answer all of your questions and assist you in making smart decisions. Don't find just any agent -- you need someone who knows their way around buying and selling foreclosures.
Budget carefully. Getting a great deal on a home isn't actually a great deal if you end up spending more than you can afford on renovations and repairs. Be sure to take fees, inspections and repairs into account when you are planning to buy a foreclosure. Some properties could require extensive renovations.