There are many factors to consider when buying a foreclosed home compared to a traditional home purchase. REO properties are an affordable housing option, but there are also more things to watch for with this type of home purchase.
Negotiating the purchase price of a foreclosed home may take a little longer than a typical real estate transaction because the process may require multiple levels of approval.
Wondering if you are prepared to purchase a distressed property? If you can answer "yes" to each of these questions, buying a foreclosure could be a good choice for you.
While buying a home in foreclosure can result in a favorable purchase price, the additional costs are often significant and should not be ignored when budgeting for your home purchase. Upfront fees to research foreclosure properties, construction and repair expenses, and the cost of any inherited liens add up quickly. Be sure you are financially prepared for expenses that are not rolled into your mortgage and think about leaving a cushion for any surprises that come up along the way.
Working with foreclosure experts will help your distressed property buying process go much more smoothly. Consider finding a real estate agent with connections in the foreclosure market to help you locate potential properties, an attorney familiar with the foreclosure laws in your area to review all paperwork, and a reputable general contractor to oversee any necessary home repairs.
Buying a distressed property is not like other home purchases. There will be starts and stops along the way, and the sale can fall through at any time. Homeowners in pre-foreclosure could come up with the money to put their loan back in good standing; a lender might be dissatisfied with the offers at auction and take full ownership of the home, potentially waiting months before offering it for sale as a REO property.
When considering a foreclosure purchase, homebuyers should be prepared to act quickly, but not be in any particular hurry to complete the sale. If you have timeline contingencies for your purchase, for example the sale of your current home, a distressed property will be difficult if not impossible to buy.
Depending on the condition of the property, significant work might need to be completed before you can move in to your new home. Even if the house is inhabitable, complete renovation of a kitchen or bathroom can make your residence unpleasant. Think through where you will live while any necessary repairs are performed.
In addition, sometimes a distressed property comes with previous owners or tenants who refuse to vacate the home. Legal proceedings to evict can be a lengthy process. Be prepared to wait it out somewhere else.
Buying a home at any stage in the foreclosure process is not simple. Be honest about whether or not you are prepared for the time and effort it will take to complete the purchase and get the house ready for move-in.
Use this site to search foreclosure properties and contact us to speak with a foreclosure specialist. (425) 409-9325.