We've been working with a number of home buyers whose home of choice happens to be a bank-owned property. Yes, it has been interesting ... walking into a home and finding an empty room where the kitchen should be, or finding rooms with missing light fixtures, etc.
But, for some the property they want to call "home" is part of the "distressed" sale market. And, with this type of property/seller, it can be quite a different transaction.
Here are five tips for buying a foreclosure:
1. Be patient. The banks work on their own time frame, and this does not include weekends or evenings. Most have files and offers stacked up, and are trying to get through them as quickly as possible. The banks don't want the properties on their books any longer than they have to.
2. Do your due diligence. There are fewer disclosures on bank-owned property, and as such, the risk is with the buyer. Have inspections so that you are comfortable with your level of knowledge about the property condition. Some lenders will provide a termite inspection/clearance, some will not. If not, consider paying for one yourself. Inspect - inspect - inspect.
3. Know your budget. Yes, bank-owned properties are generally below "market" value. However, we are seeing multiple offers on these properties, with the eventual sales price going for more than asking. When you combine the increased sales price, the amount of money you spend on inspections, and then include necessary repairs (that are funded with cash out of pocket) ... make sure the property really does fit your budget.
4. Pick yourself up and do it again. You may not get the first property you make an offer on - or the second - or the third. If your offer is not selected, then move on to another property. There are more homes coming on the market every day.
5. Use a real estate agent. Using a real estate agent will give you access to the greatest number of homes; and with their professional guidance and expertise, will help you succeed in today's real estate market.