Getting your dream home for less has never been simpler! Today’s housing market is overflowing with foreclosures, with an estimated one million homes in the U.S. going through foreclosure in some phase or the other, right now.
There are lots of people that are considering buying a foreclosure, and it’s no small wonder why. The potential to get a great deal exists, but you really need to know what you are getting yourself into when you are considering purchasing a distressed property.
Should You Buy a Foreclosure?
Foreclosures are known as bank-owned or real estate-owned properties, and are sometimes referred to as REOs. A foreclosure sells, according to RealtyTrac, for an average of forty percent less than a property that is not classified as a distressed property.
Foreclosures are not right for all buyers, but they do provide a wonderful opportunity for a lot of folks looking to get into home ownership. But buying a foreclosure requires you to make special considerations. These homes are sold as-is. The distressed owners of these properties, prior to being foreclosed upon, likely failed to maintain the home. Many are in a state of disrepair. Some will need major renovations to be livable.
Sometimes, a disgruntled homeowner damages the property deliberately, or removes items from the home that the new owner must replace. Moreover, some properties may sit vacant for a long time, years in some cases, and may have attracted vandals, squatters, or at the very least, pests and vermin.
Watch Out For Foreclosure Auctions!
When buying a foreclosure, focus on REOs more than short sales or auctions of foreclosed property. While all three are lucrative and there are good deals to be had, the REO is optimal to the others.
Short sales usually take a long time to negotiate, and auctions require that you have cash on hand. Further, you don’t have the opportunity to inspect homes that are going on the auction block due to foreclosure, since the current owners do not have to allow you to do so.
An REO, on the other hand, is bought very much like you would buy any other home. Banks usually hire out real estate agents to show their properties to potential homebuyers. You can inspect an REO property, and banks offer mortgages on these homes. REOs can be the lowest priced of all types of distressed properties, since they often need a lot of work and banks offer deep discounts to get rid of them quickly.
What the bank wants is to minimize its losses on the foreclosed home. This makes them more willing to deal with interested buyers who put a reasonable offer on the table.
When looking at foreclosed REOs, there are a few tips that top realtor suggest. First of all, be sure to order a professional home inspection so that you will know exactly what you are getting into. Have your financing in place by getting a pre-approval letter for your mortgage before you start shopping for REOs. And lastly, work with an experienced realtor who understands the foreclosure market and current trends for your local area.
This guest blog was provided by Allison Klein who helps buyers purchase Fort Collins CO homes for sale and specializes in the many neighborhoods Fort Collins has to offer including Observatory Village Fort Collins real estate and Old Town Fort Collins homes for sale.