The recent problems with the economy and subprime mortgage lending have left a tremendous number of foreclosures for sale on the market. This may seem like a bonanza to many prospective homeowners. However, a lot of buyers make the mistake of bidding too low. Even if you bid above the asking price, you can still lose to another buyer. However, if you understand the way the typical home buyer and the bank think, you can win a foreclosed home for a good price.
Consult a Realtor who’s Experienced with Foreclosures
Most realtors only charge commission from the seller, even when the property is a foreclosure. Their services to the buyer are usually free. Carefully examine the price of the foreclosed homes in comparison to their size, condition and features. For best results, choose a home that is in relatively good condition, but is need of primarily cosmetic repairs. Look especially for condition issues that put off most buyers, such as peeling paint, rotten linoleum, outdated appliances and missing carpet.
Have the Foreclosure Inspected
When buying a foreclosure, a professional inspection is a wise investment. Ask your realtor to recommend a good inspector that she works with frequently. A home inspection can uncover serious, hidden problems with a foreclosed home, such as termites, foundation problems or a leaky roof. However, don’t completely rule out the foreclosed home if it has potentially serious problems.
Get the Foreclosed Home Appraised
This can help you to determine if it’s really worth the price the bank if asking for. If the condition issues of the foreclosed home seem relatively minor and don’t reduce the value of the home below the asking price, you may have a winner.
Bid the Asking Price
Bidding too low is a common cause of losing a foreclosure to other buyers. However, don’t bid too high. If you lose this home, there are other foreclosures on the housing market that you can buy. Offer to make a cash downpayment of 20% on the foreclosed home you’re thinking of buying, if possible. Ensure that you have cash to cover the closing costs, as well. Even if other buyers offer the same amount of money or more, an offer of cash can sway the bank in your favor.
Make Your Foreclosed House a Home
Fix up your new house enough to make it liveable. Check a discount store for essential appliances and finance them at 0% interest. Replace the most important fixtures. Paint the house yourself in your spare time. Check in your area for excellent prices and financing on flooring such as hardwood, carpet and linoleum. Feel free to take your time fixing problems with the foreclosed home that aren’t as critical.
Now is the best time to buy a home. House prices and mortgage interest rates are lower than ever. While buying a foreclosed home takes some preparation, it is not as hard as it seems. If you put your mind to it, you can buy the foreclosed home of your dreams.