7 tips when buying foreclosures
With investors and first-time homebuyers looking to capitalize on buying foreclosures and discounted properties, good deals usually go fast! It’s unrealistic to think you’re going to get a pristine property in a prime location for 50 percent less than area comparables (comps), but 20 percent under the neighborhood market is possible in some areas. If you’re a potential foreclosure buyer, the obvious place to start is price and condition. But there’s far more to it. Consider these seven tips to get your best deal on foreclosures.
- Find mispriced deals. Everyone is looking at the underpriced homes and they will have lots of competition. Keep your eye on the overpriced properties. There is a good chance that after a while, the bank will be happy to get your low offer.
- If the home needs repairs, look at the market value and determine if it can still be a good investment. For example, a house is listed for $150,000 and needs $25,000 in repairs. If comps for the neighborhood area are above $175,000 then it could be a good investment in future.
- Pay cash if you can. Banks sometimes prefer cash over financing, especially if there are multiple offers or auctions.
- If the foreclosure is in a good neighborhood it will support future appreciation. Besides good location, look for nice lawns, and great schools.
- If you are a cash buyer, buy at the end of the quarter, or month to try to get the best deal. Banks want the property off their books and will be willing to deal. For example, if you are buying in 4th quarter make October/November offers with closings before December 31st your winning!
- The devil is in the details. Always work with a licensed realtor and home inspector when looking at foreclosed homes. Because of sheer volume REO listing agents will limit highlights, take minimal pictures and may miss some details in the home that could make it a winner with the right upgrades. So do your homework, don’t just buy based off online info.
- If you are buying a foreclosed home, don’t buy based on emotion. Think like an investor. Lowest price for greatest return. If you can do the work yourself, save yourself some money and gain instant equity.
Most online sites like zillow.com, realtor.com, etc. included foreclosures with regular listings. However, here are some sites that strictly do bank-owned, government-owned foreclosed properties: auctions.com, hudhomestore.com,