Buying a foreclosed home is different from purchasing a property for resale. While a foreclosed home may mean that a buyer may easily move in because former residents have already vacated the premises, this also means that the new owner will have to shoulder all the costs of repairs or renovations.
Here are 5 tips when buying a foreclosed home:
Work with a real estate broker
A realty broker will intermediate for you and banks that have foreclosed homes listings. This ensures that a property offered has really undergone the process of bank foreclosure and is now on the market for a new owner.
Secure a preapproval letter from a lender
Real estate experts advise buyers to first secure from a lender a preapproval letter that contains information on the amount of loan a borrower can take out based on his credit history and resources.
Know all listings that are within your loan range
When talking to a realty broker, buyers should ask not only about current listings but also those foreclosed properties that will soon be listed. This ensures that the borrower can comb through all foreclosed homes that are within their pre-approved mortgage range.
Before making an offer on a foreclosed home, it is best for a buyer to compare the recent sales prices of similarly foreclosed properties. Oftentimes, banks come out with low list prices so interested buyers can make a higher offer.
Be ready with repairs
The properties are offered as they are so it is best to also consider possible repair or renovation costs when looking at foreclosed homes.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan