So you’re ready to buy your first or next home, but you want to get a discount. Foreclosures can definitely be cheaper than most brand new or resale homes, but you might want to read up a little more on bank-owned properties before you consider purchasing one:
Buying a foreclosure is a lengthy process, and, although most investors prefer pre-foreclosure sales and auctions, you will face your share of competition for bank-owned homes.
Buying an REO
Purchasing a bank-owned property is much easier than buying a home at auction and much like a conventional purchase. You’ll need a loan preapproval letter from your lender, unless you’re paying cash, and the services of a real estate agent.
Most REO properties are vacant and somewhat cleaned up. Although the bank won’t supply you with property disclosures as sellers in a conventional transaction are required to, you will be allowed time for inspections.
Many experienced REO buyers perform extreme due diligence, such as checking the city planning office for permits that may be on file for any work the previous owner performed. Have anything that looks the slightest bit suspicious inspected, from the roof to the foundation.
Your buyer’s agent should be able to assist you in learning as much as possible about the home’s history. And, since real estate brokers are required to hold on to transaction files for a number of years (varying according to state), if the home sold in the past few years, your agent may be able to track down a past disclosure.
Banks typically don’t pay for repairs to the property, so you’ll need to take on that expense. Ultimately, although it may seem that you’re getting a bargain-priced home, once all is said and done, it may be worth it to purchase another home in turnkey condition.
For more tips and advice on buying foreclosures, feel free to check out the rest of the article from my website here.
Have a great weekend, everyone!