There is no question – now is the time to buy a house. Foreclosures are at an all-time high and their presence in the many markets creates a feeding frenzy every time a new one comes up for sale. These homes are listed in every section of the market and are often in very good shape structurally; some only need light cosmetics (think paint and carpet). Like anything in life, it pays to be prepared. Here are some tips to make your experience as profitable as possible.
1. Be Ready – Know Your Marketplace. Most foreclosures sell in 3 days or less so spend some time with your Realtor getting to know your target area. If you know the comps before a foreclosure hits the area, you will be prepared to act quickly and trump any other competitive buyers. Have a pre-approval ready and waiting to roll so there is no hesitation. If you wait, you might lose the deal before it even gets off the ground.
2. Do Not Be Afraid To Get Your Hands Dirty – Some foreclosures are in great condition but, by and large, you are going to have to invest some sweat equity to get your new home habitable. Do not let the cosmetics scare you away; look for strong structural components like good floorplans, great neighborhoods (remember: location, location, location), and newer roofs. You can change the carpet – you cannot move to your house.
3. Know Your House Inside and Out – The whole idea behind buying a foreclosure is to save money, right? Then spend a little extra up front – on the home inspection. Banks make no representations (or guarantees) about the properties they sell and they are not liable for repairs after closing. Get the best inspector you can afford and look for things that might be costly trouble down the road. To save money, do your due diligence.
4. The Asking Price Is Often Very Close To The Selling Price – A really common misconception is that banks will take huge cuts in their asking prices for every foreclosure. Much of the time, this is wrong, wrong, wrong. Banks have specific guidelines about what they will and will not accept and they know that if you do not buy it today then someone else will look tomorrow. This is especially true with homes that have a lot of appeals. If you really like your house, make a reasonable offer and BUY it!
5. A Realtor Will Do You A World Of Good – Agents spend lots of time combing the market for good deals. Good ones know their marketplace intimately and have often worked closely with many of your future neighbors. Use their experience to help you find the best deal possible. They will have the objective, professional eye you need to spot resale potential before you purchase. This single choice will save you thousands down the road – and agents usually charge buyers nothing to work with them!
Opportunity knocks but you still have to open the door. Real estate is historically among the safest investments. Interest rates are historically low but are creeping upward again and prices appear to have leveled in many markets.