If you’re thinking of buying a foreclosure property, there are five tips you must keep in mind.
If you’re thinking about buying a foreclosure home, here are five tips you need to keep in mind:
1. Remember that it’s usually hard to access these properties before they hit the market. A lot of people believe there’s a secret way to access a foreclosure before it hits the open market, but the truth is the majority of them aren’t done by small or local banks, but ones that have thousands of assets across the country. As you can imagine, these organizations are in the financial industry, not the real estate industry, which means they typically delegate the entire foreclosure process to a management company. These management companies typically hire a local Realtor to value the property for them before they list it.
This is beneficial to them because they can have a local expert represent their interests and ensure they get the best price possible. This is why you typically find out about these properties at the same time everyone else does. If a local bank is foreclosing on the property in question, you might be able to knock on their door and find out who’s handling their REOs, but that’s the exception rather than the rule.
2. Make sure you’re actually getting a good buy. Foreclosures aren’t as good of a buy as most people think. Most foreclosures are listed on the open market, which means their visibility and the demand for them are the same as other properties. They’re valued at the highest price possible because that’s what the bank and the listing agent needs to get for them. They’re not just giving these properties away.
3. Do a full property inspection with the utilities on. If you’re buying a foreclosure, you need to investigate whether the home’s been properly winterized and you can turn on the furnace if you need to. Sometimes you need special access to turn the utilities on, and that can cost you a lot of time and money.
4. Prepare for the worst if you’re buying the property as-is. If you can, have a contractor go through the home and estimate the cost of renovating it. If you don’t turn the utilities on, you may find cracked water lines or a furnace that needs to be replaced.
5. Have proper expectations regarding a closing date. For instance, foreclosures can sometimes have title issues that need to be resolved. I have several clients who are pursuing foreclosures whose closings have been backed up for months.
If you have any more questions about buying a foreclosure property or you have any other real estate needs, feel free to call or email me at your convenience. I’d love to speak to you.