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A Homebuyer’s Guide for Purchasing a Foreclosure

A Homebuyer’s Guide for Purchasing a Foreclosure

     
February 2, 2014  |  Real Estate

Foreclosed properties are great deals to be had for buying a home in the market these days. If you are eyeing a foreclosure, it is best to be armed with the right information for purchasing such type of property and its different stages to be able to maximize the benefits of home buying and ensuring that you get your dream home!

Pre-foreclosure.

This refers to the stage where the property has potential for foreclosure but is still owner-occupied. This occurs when the owner is not current on their payments and is in danger of affecting the credit and equity that they have. This can be a tricky stage for buying, mainly because of the deadline that the seller is treading on. Many sellers work out a short sale (sale of property that is less than the amount owed) if the bank allows it and if they can find a buyer within a shorter time frame.

Property Auction

If you are going for auction, know that you are going against the bank. Cash is typically required at this stage if you beat the bank’s bid and win the auction. Find out about liens (any claim against the property resulting from debt or other obligation) and repairs needed to be done for the foreclosed home.

Post-foreclosure.

Post-foreclosure is also known as REO – real estate owned property by a bank or lender. The property is listed on the market by a local real estate agent hired by the bank or lender, selling it to recover money owed on the foreclosed property. Banks are more open at this stage to work with buyers on the selling price. Why so? It’s because banks do not particularly like the idea of owning real estate therefore, they want to get rid of foreclosures as soon as possible and get real estate agents to do the work of selling it on their behalf.

Notes on buying a foreclosure

* Get pre-qualified! Never underestimate the advantage of talking to a mortgage lender early on in your home buying process. Talking to a lender, getting as much information about buying and working on your credit, and having your income and assets verified will allow you more negotiating power. Not to mention, the confidence to go out there to check out some homes and negotiate with the bank knowing how much you can actually afford to purchase and work on.

* Do your research. On what, you might ask? Pick a zip code you are interested in, the status of home selling and home buying in that area, recent trends with property values, and of course, the foreclosed properties in the area you like. Are there any that has caught your fancy? Is there a particular property type you are looking for and is there such foreclosed home in the zip code of your choice? It wouldn’t hurt to check out the neighborhoods too and see if you see yourself living long term in that community.

* Get a home inspection done and make an offer based on the result of the inspection on the foreclosed property.

* In line with the inspection, be in the know of the repairs needed to be done and their corresponding costs.

* Keep in mind that as the buyer of a foreclosed property, you have the upper hand in negotiations for the closing costs and repairs made by the bank

* Lastly, work with an experienced real estate who has the knowhow, understanding, capability and much experience under the belt in handling foreclosures. Simply go for a Realtor who specializes in foreclosures. Period. This real estate agent would have the information you need (those that really count) and access to local multiple listing services, and therefore can direct you to potential deals that are of VALUE in terms of price, area, property, and most importantly, giving you the home you want. Working with an experienced foreclosure real estate agent will give you access to foreclosed properties that actually meet all your preferences. If your real estate agent has a lot of options to show you and know what to check out for you, your choices are both advantageously of quality and quantity.

Patience is key in working with a foreclosed home. If done right and with the help  of your Realtor, you will find a beautiful home – your dream home!

 

The Blake Team is a full-service Real Estate team based in Denver, Colorado specializing in working with Buyers & Sellers, foreclosures/HUD, short sales, and luxury properties. 

About the author

The Blake Team is a full-service Real Estate team based in Aurora, Colorado specializing in working with Buyers & Sellers, foreclosures/HUD, short sales, and luxury properties. A team with years of experience and an impressive success rate that made it the No.18 real estate brokerage in the nation, as well as the No.1 Keller Williams agent in Colorado led by CEO & Founder Lisa Blake. The Blake Team is your No. 1 choice for getting your dream home!