The real estate market is at its peak for sellers, with property values and mortgage rates increasing. However, that doesn’t mean you shouldn’t buy a home. It’s wise to snatch up a great deal on properties before interest rates rise even higher. One of the best investments you can make is buying a foreclosed home.
These homes are taken over by the previous owner’s bank legally after the homeowner failed to pay their debt or mortgage on the property, where banks will then place it up for sale or auction. Since banks only wish to recoup some of its losses, buyers can grab these properties for a steal.
However, before buying a foreclosed property, consider these dos and don’ts to get the most out of your money and make the right decision.
Dos
Do A Thorough Check on the House
Since foreclosed houses may have been sitting unoccupied for a long time or were never lived in at all, it’s best to have the home inspected from top to bottom. Have the plumbing checked, ask some pest control experts and electrical service contractors to make a thorough assessment of the state of the house.
Do Browse in the Right Places
Even if you like the property itself, it’s best to do your research on its neighborhood like its crime statistics, to ensure it’s a place where you can live safely and comfortably. However, don’t limit your choices in one particular area and consult with a broker to see which places fit your needs.
Do Work With Banks or Brokers
When buying a foreclosed property, expect to get it ‘as-is and where-is,’ which poses many risks. That’s why you need to conduct thorough inspections in each property you plan on bidding for, but this process is easier said than done, especially when you have numerous properties lined up. To reduce your risks of ending up with a problematic property, working with a bank or a broker can help you find one that’s worth the money and promise considerable returns.
Don’ts
Don’t Forego Inspections and Viewing
Foreclosed homes often get sold ‘as-is,’ meaning the bank or real estate selling it won’t cover or do any repairs when you buy it. To avoid this, visit the property in-person to see if it’s going to cost you more in the long run. If you want to get the most of your money, hire an inspector to check the home thoroughly.
Don’t Expect to Make a Profit Out of the Home
Many foreclosed properties are placed on the market with low prices, which may seem like a great steal, but they aren’t worth it most of the time. That’s because you may find yourself spending more on restoration to make the property habitable or fully functional.
Don’t Rule Anything Out
When shopping for foreclosed properties, it’s wise to make a traditional listing of the package before you commit to it as most of these homes require hefty repairs and maintenance, which may cost you more in the long run. That’s why when browsing around for these properties, make sure to keep an open mind and don’t rule anything out.
Foreclosed homes tend to go at a 37% discount on their initial price, making the savings worth the investment. However, before signing any papers or diving into a deal, consider the dos and don’ts mentioned to avoid making bad investments or getting stuck in a time-sucking money pit.
