Purchasing a foreclosure property can be a great way to break into homeownership, particularly in markets with high prices and low home inventory. While buying a foreclosure is a little different than traditional sales, it’s not that challenging of a process. Check out the five do’s and don’ts below to ensure your foreclosure buying experiences is as painless as possible.
- DO get 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.
- DON’T buy 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.
- DO know what it will cost to make 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.
- DO know what other similar 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.
- DON’T underbid
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.