Buying a foreclosed properties can have many benefits. The transaction however, may vary significantly from a conventional purchase. I will help guide you through the process and ensure you have the highest possible chance of securing the property.
Are you able to make a strong offer to the bank? Foreclosures often attract many wholesale / contractor clients who are cash buyers without any contingencies.
How long has the house been vacant? Was it winterized properly? Are the utilities functioning? Vacancy can wreak havoc on a property from frozen pipes to theft and vandalism. Some problems may not present themselves until after purchase.
Besides having the capital to make a strong offer, consider budgeting for necessary repairs and improvements. Bank REO (Real Estate Owned) properties will not pay for repairs or provide credits. Any repairs will be coming out of your pocket. Are you prepared for major systems replacements?
Foreclosure can be longer transactions than traditional purchases with undetermined final transaction dates. There are typically several layers at the bank that have to collaborate and this can significantly slow down the process. How long are you prepared to wait? Do you have suitable housing in the meantime? Can you wait several months and then close suddenly with brief notice? Things to consider before jumping in.
What is your ultimate goal? Do you love a house that happens to be a foreclosure or is the buzzword screaming your name as HGTV flippers make 100k profits flipping house after house? Although every house is a case by case basis, the banks selling these REO properties are trying to get market rate (or more with adjustments for poor condition) and are being sold on the open market with heavy competition. If you're investing, be sure to budget for large unseen expenses and prepare if there is a shift in market values.
Foreclosed properties can be great deals. They do however transact in a more wholesale manner than a typical transaction and having a buyer's agent on your side looking out for your best interest is strongly recommended.
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