Foreclosure homes often carry a negative reputation in the real estate industry. When many people think of foreclosures, they imagine an abandoned property. While this is sometimes an accurate image, many foreclosure homes present excellent investment opportunities for buyers. If you are currently considering a foreclosure property as your next purchase, here are a few essential points to understand before moving forward.
Expect significant competition
Everyone loves to strike a great deal. One of the most appealing benefits of purchasing a foreclosure is buying at a discounted rate. This low price is due to banks and lenders who are looking to get these properties off their books as soon as possible. If you are looking to secure a foreclosure property, it is best to go directly to the lender in order to bypass the competition. In many instances, you may even be able to purchase a foreclosed home before it hits the open market.
Budget for repairs
When purchasing a foreclosure home, it is crucial to factor in the potential repair and maintenance costs associated with owning the property. In many cases, foreclosures will require repairs if it has been vacant for an extended period. If a foreclosure is sold in an "as is” condition, you may also need to factor these additional costs in your initial calculations. Give yourself plenty of financial cushion with your estimates to avoid stretching your budget as you submit an offer.
Remember that bank foreclosures are safer deals
Foreclosures sold at auctions can be risky purchases. In general, if you plan to purchase a foreclosure, ensure that your transaction is made through a bank to choose the safest route for your purchase. Banks will allow you to inspect the home thoroughly, and they are also required to pay all residual back taxes.
