5 Things to Consider when Buying a Home in Foreclosure
Regardless of where you live, spend some time browsing homes for sale in your area and you’ll likely come across some properties in foreclosure. Foreclosed homes can be a great deal for buyers, since they’re competitively priced to sell. But there are also risks involved. Figuring out whether or not you should buy a home in foreclosure requires some careful research about what you’re getting into and what you might be able to expect out of the process.
In many ways, buying a home in foreclosure is a lot like buying a standard home for sale. You’ll have to go for a showing, make an offer, and go through an inspection—just as you would otherwise. Where things start to get a little murky is in the process itself. Once a home is foreclosed on, it becomes the property of the bank. The bank then is your seller—not the previous homeowner—and that key difference has quite a big impact on how your sale proceeds.
So the question is, should you buy a home in foreclosure? Before you make your decision, check out this 5 things that you should consider so that you can ensure you make a smart purchase.
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You’ll Definitely Need to Go See It In Person
A homeowner who has foreclosed on their home may not have been able or willing to take great care of the property in the lead up to the foreclosure. Even if a deal seems too good to pass up, it is always necessary that, before you buy a home in foreclosure, you go see it in person so that you can get a good idea about what kind of condition it’s in. You may have to budget for aesthetic fixes, or there may be a need for some major repairs. Either way, it’s better to know about these things before you buy than after.
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You’re Not Going to Have Recourse for Repair Work
Remember, if you buy a home in foreclosure you’re buying it directly from the bank. And unlike your everyday home sellers, banks aren’t in the business of offering up incentives and contingencies. Banks almost always sell homes in foreclosure “as is”—meaning that what you see is what you get, even if what you see is a busted roof and a furnace that’s on its very last legs.
With a traditional home sale, the inspection is your opportunity to find out everything that’s wrong so that you can go back to the seller with requests for credits or repairs. With a foreclosure sale, however, the inspection is simply a formality to point out what’s wrong with the property—and what you’ll be on the hook for fixing if you do decide to go through with the purchase.
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You Will Have Some Things You Can Negotiate Though
Banks are very motivated sellers, which is why foreclosed homes are often priced under market value. Take advantage of the bank’s eagerness to sell by seeing if you can possibly negotiate some sale factors in your favor. For example, ask about lowering the sale price, reducing the down payment or escrow requirement, or shortening or extending your closing period.
The bank has no sentimental attachment to the property, and they’re not trying to maximize profit so much as not end up in the red. And when you’re dealing with a seller who just wants to get a home off of their hands, you’ve probably got some wiggle room when it comes to the nitty gritty of your deal.
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You’ll Need to Get Your Financing in Order as Early as Possible
Every single day that a foreclosed home sits unpurchased is a day that the bank loses money. And while that certainly puts some power in your hands as a buyer, it’s still wise to do what you can to shuffle the deal along as quickly as possible. A good way to do that: getting your financing in place before you even make an offer to buy a home in foreclosure. That way, you can be as competitive as possible when you do reach out. Plus, most banks will require preapproval before engaging with your offer at all.
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You May Have to Wait a While For Your Closing Date
A standard closing on a home takes around 50 days, give or take a week. And while it may seem like a long time while you’re in the process, it’s actually rather speedy considering all that transferring a home from one owner to another entails. The pace is set by both buyer and seller, both of whom are doing what they can to move the deal forward as quickly and smoothly as possible.
When you buy a home in foreclosure from a bank though, the other end of the closing transaction is being handled not by a singular seller and their agent but by a business. That can mean having to navigate through bureaucracy and delays that set your closing date back further than it might be otherwise. It’s not always the case, but it’s worth being aware of.
Want to Buy a Home in Foreclosure?
If you’re thinking of buying a foreclosed home in westport connecticut area and need some help, we’re here for you.
Ruspini Realty is committed to assisting a diverse group of people in a wide range of house values from the starter home to the prestigious property. We list, market and sell homes fast for the benefit of both buyers and sellers alike.