A foreclosure is a property that has been taken back by the lender from the borrower who was unable to keep up with the payments. There are opportunities here to get a home at below market price, but there are things you’ll want to be aware of as well.
The first thing you want to do is find out what foreclosure properties are available in your area. Working with a real estate agent who is certified in handling what are called “distressed properties” is a good place to start.
They’ll be able to give you details on available foreclosures and other properties similar to those foreclosures, called “comparables.”
Once you have found one or more that you like or at least a price range in which you want to buy, you’ll want to get preapproved by your lender in that price and payment range. In fact, you could get preapproved before you see a real estate agent to see beforehand what you can truly afford.
Once you locate a property and make an offer, a couple of things need to happen. The first is that you’ll want to get a home inspection.
Though this is optional, it is recommended, as it can head off many surprises down the road should you end up buying the property. Foreclosures are sold on an “as is” basis and may come with hidden issues. Better to know now rather than later.
Also, the lender will order an appraisal, which you’ll pay for, to see if the property is worth what the selling bank says it’s worth.
If it comes in low, you’ll either pay the difference between the contract price and the appraised value or move on to another property. Your real estate agent, however, should be able to very closely determine the appraised value before you put in an offer.
I would be happy to answer any and all questions you might have about financing or buying a foreclosed property. Please just give me a call.