How To Buy Foreclosures: Great Deals for Good Homes

There are only two things to remember before getting down to business: find a reputable real estate agent who works directly with banks, and get a pre approval letter from your lender.

Ask any Washington real estate agent or local realtor and they’ll help you get your dream house – but ask a bank broker and you might be able to afford more. These agents work directly with banks regarding foreclosed homes: houses which have been forfeited by lenders due to failure to pay the mortgage. Heartbreaking as it may be for the homeowners, but these types of dwellings make good deals as long as they’re not bought on a whim.

Why Buying Foreclosed Homes is a Challenge
Unlike regular houses for sale, foreclosed homes have three key downsides:
•    There’s little room for negotiation.
•    Foreclosed homes are also called ‘distressed homes’ for a reason.
•    They quickly sell out.

It’s important to be clear about these roadblocks because many first-time buyers are highly disappointed the moment the deal is set. Since the lender or bank has already seized the property, the home’s price is as is: if it’s $200,000.00, it really is $200,000.00 – don’t waste time and effort in trying to bargain for a better deal. There are cases however, when the bank would greatly reduce the price. Once this happens, numerous offers would be written off in a single day until a good deal is struck. Sometimes, if it’s priced too high, you may come in a bit lower. There’s no guarantee – so check your local listings to compare recent sales prices to be in the know.

Other common errors buyers make is assume that the bank selling the house would also finance the mortgage – it doesn’t work that way. Plan how you will be able to finance it (cash or loan) first before going through the market. The homes might appear affordable, but keep in mind that prices don’t include repairs and maintenance. These cannot be deducted from the final offer so prepare for that as well.
The road to foreclosed home ownership is definitely bumpy – because it’s considerably lower than most houses for sale, countless people also have their eye on it. Be ready to go through a lot of houses and to write a lot of offers.

When Buying a Foreclosed Home…

These special brokers have more or less worked with the banks for years and have access to foreclosure listings not yet posted online. Call them about the houses you’re interested in, but also ask them about upcoming listings. These agents might be swamped at times, so prove you’re a serious buyer by getting the preapproval letter beforehand. Meet your lender and have your finances checked to make sure you have the funds for the house in case a sale goes through.

Purchasing foreclosures isn’t for everyone, but it can be very rewarding in the end. Don’t forget to do your homework first by researching required information to avoid being a victim of frequent scams. As daunting as it seems, try to enjoy the process too – who knows, maybe your dream home is disguised as a foreclosure.