The number of foreclosure homes on the market isn’t what it once was, however, there are still good deals to be found. In areas with particularly competitive markets, like Denver, considering a foreclosure home is a great alternative to a traditional sale. While buying a foreclosure is a little different than a regular home purchase, it’s not that challenging of a process. Below are five mistakes to avoid if you’re considering purchasing a foreclosure.
- Not getting your finances in order
With any home purchase, it’s important to know what you can afford before you start shopping. And if you’ll be using a mortgage to pay for the home, having financing lined up is one of the best ways to prove to the seller that you’re a serious buyer and increase your chances of having your offer accepted. When you’re buying a foreclosure, taking this step is not optional. Banks will expect to see a pre-approval letter with your offer. - Buying a foreclosure without seeing it first
Without going inside, and without an inspection, you won’t know what shape the home is in until you get the keys. At that point, any unexpected costs are yours, and they can run into the tens of thousands of dollars. - Not knowing the costs of making the home livable
Good foreclosed homes are merely houses that have sat empty and neglected for months, with dead lawns, peeling paint and other relatively minor problems. Others are so trashed that you can’t live in them before making repairs. For $300 to $500, a home inspector can help you spot many of the problems. - Not knowing what comparable homes are selling for
Your realtor will be able to provide numbers on what other foreclosure properties in the area are selling for. You might not always be able to tell the condition of the homes that recently changed hands — though sometimes listing photos are still available and can give you an idea — but you’ll be able to establish a range of prices, a typical price per square foot and an average price. - Under-bidding
Set a firm maximum price that’s within your budget and near the property’s actual value. Be prepared to walk away if the bank won’t accept it. And don’t forget to factor in closing costs if you’re getting a mortgage — they can add thousands of dollars to your transaction.
If you’re ready to check out foreclosure options in the Denver metro area, contact Metrowest. We specialize in these types of sales and would love to help you start the process.