Foreclosed homes are considered great deals because they come with a much reduced price tag. But often buyers do not understand what they are buying. Simply speaking, foreclosed properties are properties belonging to homebuyers who couldn’t make good their home loan payments. Banks sell these properties to recover the loaned amount, and thus, offer the properties at rates much below the market price.
Definitely an attractive proposition for any homebuyer, one must remember that purchasing a foreclosed property can throw up its own set of challenges in terms of lengthy paperwork and loopholes. In this blog, we share 10 tips to help you succeed with buying a foreclosure home:
Research – Buying a foreclosed property can be highly profitable if you are armed with right knowledge. Foreclosure laws differ from state to state and the location of the property will determine the procedure for sale.
Property inspection – While you many not have enough time to inspect the property minutely, getting a professional property inspection can save you much in the future. Most home owners who default on their mortgage know their property may be foreclosed in the future and often maintain it poorly.
Title of the property – Remember when you buy a property, you become liable to pay any liens on the property that have not been discharged. Never ever skip a title search on the property to know any unpaid taxes or debts secured against the property.
Confirm the market value – A foreclosed property is a good deal because it is sold below the market price of comparable properties. However, how do you know that is the case? To ensure a bargain, research the area around your chosen property to understand the real estate mechanics of the area for a better deal.
Additional costs – Knowing the additional costs can help you judge better whether the property is a good deal or not. It will also help you decide the offer price. Check how much you’d need to spend on repairs or any liens that will have to be discharged to get a clearer picture of how much you are actually going to spend on the property.
Make an intelligent offer – Banks want foreclosure homes off their books and often sell them for a loss, but don’t think lenders or distressed owners will entertain too low a deal offered by you. To have your offer considered, you must make an educated offer backed by figures from comparable sales in the area.
Loan pre-approval – Lenders with foreclosed properties only consider serious offers and having your loan pre-approved makes you a serious bidder for the distressed property. Further, not all lenders would lend you for buying a distressed property, especially one that is rundown, unless they are satisfied after a property valuation. So having a pre-approval means you can afford to buy the property you are making an offer on.
Save for a down payment – Having cash is always good when buying a foreclosed property because a down payment of 20 per cent can seriously turn the lenders’ attention your way. Further, the property inspections, repairs and unpaid liens are going to cost as well and may not be covered under your home loan for a distressed property purchase.
Don’t get emotional – It may be easy to fall in love with a property but your heart must not overrule your mind. If a deal looks bad, do not hesitate to move on even if the house seems to be the perfect one for you.
Use an online listing service – Foreclosed homes for sale attract a lot of investors, flippers and other buyers meaning a lot of competition for every single property on the market. The only way to succeed is to identify good deals and move in first to make a large profit. ForeclosureSearch Canada is a one of its kind online listing service offering online and app based listing services for foreclosure homes in Canada. It provides information about latest listings, property details with photographs and contact information and enables location based searches that can be filtered according to intuitive search parameters such as postcode, price, property and listing types. The app also doubles up as an information portal providing insightful tips on purchasing foreclosure properties in Vancouver, Toronto, Calgary, and Edmonton.
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