How to Buy a Foreclosure Property

Posted by admin on December 22, 2009 under Real Estate License Basics | Be the First to Comment

What has been a difficult time in the housing market has created some fantastic prospects for people to own homes that were previously outside of their price range. Foreclosure properties can be offered at up to 30% less than the market price, making them opportunities that can be too good to pass up. It is important to note that foreclosure sales are different from traditional home sales. Understanding what a foreclosure property is and the distinctions in the processes are very important. Preparing yourself is always important before a real estate transaction, but even more so in a foreclosure sale.  The opportunities offered by foreclosure are also attractive to those looking for new careers – some as real estate investors and others getting their real estate license to assist in the multitude of foreclosure sales.

As in any real estate transaction, financing should be at the top of your list of things to do before you shop. Check your credit report and resolve any outstanding issues that may be negatively affecting your credit rating. Resolve issues and get yourself pre-qualified for a mortgage so you are aware of your budget limitations and will not have to worry about securing financing for your purchase after the fact where you risk not getting approval. Make sure that you have the financial approval and available funds for associated costs such as down payments and closing costs all secured and verifiable when you start looking for your foreclosure property.

Foreclosure properties can be located in a number of ways. There are lists of Real Estate Owned (REO) properties that you can purchase for a nominal fee. Free lists can also be found through agencies like the Department of Housing and Urban Development (HUD) or Fannie Mae. Foreclosure properties are listed and sold quite quickly, so be sure to check lists often. Many times they are updated daily or in some occasions even several times a day, so it is important that you remain aware of the inventory that is available to you.

It is advisable to find a real estate agent that specializes in foreclosure properties. There are many legalities and additional paperwork involved in the purchase of a foreclosure home and a traditional real estate agent may not necessarily be familiar with the intricacies of the foreclosure process in the state that you are looking to purchase a foreclosure in. Make sure that your agent checks comparable properties thoroughly to be certain that you are, in fact, getting a good deal on the foreclosure home you are looking at. Your agent should also check the property for any back tax liens or dues that may be owed on the property before you make an offer. Know who is responsible for paying these fees before the deal is made.

Inspecting the property thoroughly is crucial. Unlike the distressed homes purchased to “flip”, or repair and resell, foreclosures are generally better taken care of, but there is always the possibility that maintenance had fallen behind. You might want to discuss with your agent the possibility of having professional home inspections done whenever it is allowed or appropriate. You can have your real estate agent look into it; however, inspections are usually an expense incurred by the buyer.

There are so many great foreclosure deals available; it is an ideal time to be able to qualify for a home that you may never before have been able to afford. Foreclosures are creating unbelievable opportunities for home buyers shopping on a budget.