Wanting to buy a property but it is too expensive? No need to worry because there is a solution to your problem. All you have to do is to purchase what you call foreclosed home. Just so you know, a foreclosed home is a property which is repossessed by bank when the borrower cannot pay his monthly due mortgage. After repossessing the property, it will be sold through an auction. If the property was not sold through an auction, then the bank will try to get rid of the property by selling it at a lower price to mitigate their losses.
However, buying a foreclosed home is different from buying a typical resale property. If you will buy a foreclosed home, the home is considered as ‘as-is’. Meaning, it is up to the buyer to pay for repairs. The room for negotiation is very little as well. Normally, before the seller accepts the offer, the buyer should have a preapproval letter from a lender. Also, there’s only one real estate agent involved. On the positive side, most homes owned by the bank are vacant. You don’t have to force the tenant or the previous owner to move out of the property already which can speed up the process of moving in.
To be successful on buying a foreclosed home, I’ll give you pointers that can be helpful.
First, you should get a realty broker and a lender. For a smooth transaction, you need to get a real estate broker who works directly with banks that own foreclosed homes and be preapproved by your lender. To look for a foreclosed homes, it is best to check on a website that has a database of foreclosed homes. The keyword for foreclosed homes is REO or Real Estate Owned, owned by bank.
Second, you have to get a broker on your side. Aside from looking for a foreclosed home, you need to get a real estate agent who can represent you on your behalf. Make sure that this agent really knows what you want in a foreclosed property. Also, being represented by an agent will benefit you as representing yourself throughout this process is very stressful. There are lots of paperwork to be processed and you have to do a lot of legwork.
Third, you have to get a preapproval letter For those of you who do not know what preapproval letter means, it is a letter from your lender grating you a certain amount of money that you can borrow. It usually depends on your financial capacity.
Fourth, the pricing depends on sales pace. You need to check the recent sales prices of comparable properties in the area. The current market condition also takes place.
Lastly, and the most common in a foreclosed property, don’t expect a repair discount. Again, you should expect that the property is sold ‘as-is’. If you try to negotiate with the seller, and there are others who are willing to buy the property ‘as-is’, the seller might give it to others.
Always keep in mind the 5 tips and you will be successful in getting a foreclosed property.