Foreclosure Shopping Tips for Beginners
Shopping for a foreclosure can be a way to get a home at a bargain. However, if this is your first time looking for foreclosures, you may want to check out these foreclosure-shopping tips before you scan the real estate listings.
Research Your Home
First time shopping for a foreclosure? One tip beginning buyers should consider is researching their own home to get a feel for real estate records. Once you see how your home looks to a buyer, you can better translate the language of the records into practical buying information.
Get Pre-Approved Before Foreclosure Shopping
Whether you are buying foreclosed homes or not, your financing determines what home you can afford. Avoid emotionally committing to a house before you know what you can spend on a foreclosed home.
Narrow the Search
After you get pre-approved for financing, start looking for basic economical neighborhoods. Remember, your neighbor’s home value affects the value of your home, too. Once you have a couple of likely areas, start looking for foreclosures.
Buy REO?
A Real Estate Owned (REO) property has reverted to the bank after a foreclosure auction. Buyers looking for a foreclosure property often believe they will find bargains in the REO market. While it is true that some gems can be found in the REO market, properties that revert to the bank with an overinflated mortgage attached are not buyer-friendly, so make sure you do your research.
Estimate Repairs
Don’t skip this crucial tip to foreclosure shopping. Figure out how much it will cost you to bring the house up to par, and then deduct that cost from any offers you make. If you are looking to purchase a property to flip, take into consideration the cost of the necessary repairs when estimating a realistic sales price for the house. If the realistic sales price leaves you with little or no profit, move on to another property.
Create a Plan of Attack
Before you make your first offer on a foreclosed home, develop a bargaining plan. Will you accept a counter-offer? If so, how far above your initial offer will you go? Having these questions answered beforehand helps you stick to your budget.
Time Your Offer
Your best foreclosure shopping times are near the end of the month, the end of the fiscal quarter or the end of the year. Submitting offers close to these turning points and you could save a little in your purchase of a foreclosed home.
Good luck foreclosure shopping!