Here in South Florida, banks are still processing an extensive housing backlog, finishing the wave of foreclosures that began with the housing market collapse. While this news is bad for some, for would-be homeowners, these new foreclosures, coupled with low interest rates, make this an excellent time to discover how to buy a foreclosure property at a great bargain.
The following are our five top tips on how to buy a foreclosure:
- 1. Avoid Auctions. There are many effective and safe ways to buy foreclosures, but bidding at court auctions is not one of them. This is because you are forced to bid on a property that you haven’t seen and haven’t had inspected. You don’t know what repairs or needed, or even whether the property owes back taxes. Instead, wait until the bank has listed the property back on the market. When banks list properties “For Sale”, it means they have paid off all existing debts and taxes, and often have finished the most pressing of repairs.
- 2. Gather your Sources. The Internet has made house hunting easier than ever. For monthly fees of up to $50 you can browse real estate web sites that list thousands of available properties. However, consider also working with an established local real estate agent and attorney to find the best fit property for you.
- Line up Financing First. Get preapproved for a mortgage before you begin house shopping. This is critical when it comes to foreclosed properties because some lenders will refuse to make a loan on distressed real estate. Find a lender willing to make a loan on foreclosures, and discover what criteria (if any) the home will need to meet to qualify for the mortgage.
- Get it Inspected. Inspections are critical when you are dealing with foreclosure properties. If the previous tenants were having problems paying their bills, they likely were forced to put off regular and necessary property maintenance. In a bad scenario, they may have even actively destroyed the property before being forced out. An inspection will allow you to estimate the necessary repair costs and allow you to report the true condition to your mortgage lender.
- Look at the Neighborhood. Even if you think you have found the perfect house, it is important to evaluate the neighborhood. A house that becomes depressed by high neighborhood crime or surrounding widespread foreclosures will be unable to recoup investment and repair costs.
If you are considering purchasing a foreclosure property, contact the professionals at Adams & Associates to help you negotiate a deal and protect your assets.