Buying a Foreclosed Home: What Not to Do

May 29, 2013 No Comments by

Don’t expect buying a foreclosed home to be the same as the typical home purchase process. As a trade-off for great pricing, purchasing a bank-owned—also called a real estate owned (REO)—property usually requires extra effort to find the right deal. With your money and time at stake, you should be cognizant of the potential pitfalls to avoid:

 

1) Not being pre-approved by a lender– The good deals go quickly, and you may not have time to handle the financing process once you find a house. By doing so beforehand, you help the transaction move quickly and smoothly.

 

2) Being unfamiliar with the market– Buyers should be aware of the price ranges for similar properties and how quickly they typically sell. Know what it is a realistic price to pay, and don’t waste valuable time submitting low-ball offers if similar homes receive many offers hours after being listed. Real estate agents who specialize in REO properties will be able to give you great insight into the market.

 

3) Holding out for discounts for repairs– Repairs should be expected in a distressed property, but some buyers assume they can bargain down the price to offset the cost of repairs. However, the majority of foreclosures are sold as is, so unless the property has been sitting on the market for a while, you shouldn’t expect to get a lower price. However, you should still enlist knowledgeable home service pros to check for evidence of roof leaks, pests, and mold.

Home Improvement, Home Services, Moving

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