How Buying a Foreclosure is Different

With a shortage of homes on the market, and the current housing demand causing a steady rise in the asking price of homes across the state, you may find yourself considering a foreclosure. Perhaps you thought you never would look at foreclosures, yet there they are, reasonably priced, and looking like they might fit your needs perfectly.

These homes are the ones seized by a bank because the owner did not keep up with their payments, and they can sell for less money than if they were being sold by an actual homeowner. They range in size, condition, and location, so there are some in just about every community you could consider.

With the foreclosures on the market today, you can ask your REALTOR about how long they have been available and anything known about the property, or the bank that now owns them. As long as you realize that there are some differences in the buying process, a foreclosure might be an ideal solution to the home shopping challenge of finding just what you are looking for- at a reasonable price.

So, as you forge ahead with foreclosures, what should you be prepared for?

1. First, you are not negotiating with Mr. and Mrs. Smith, aka: a homeowner. You will be dealing with a bank or mortgage company and they are not usually up to much negotiation. While a homeowner selling their home is probably prepared to negotiate on the asking price, and will make repairs to the home before they try to sell, banks are pretty set in the “as is” contingency for sale.  They are not in the business of fixing or negotiating. The aim to sell it and recover their investment. There is wiggle room, but not usually too much.
   
   
2. You can do an inspection, but it is for your own personal information only. Don’t expect the bank to repair the home or its systems. You can ask, but it is probably a “no”.
   
   
3. Unlike most homes on the market, a foreclosure may have sat vacant for a while. Often these properties have been left in poor condition or with damage done by the foreclosed upon homeowner who did not leave the property happy to lose it to the bank. They were probably in financial crisis too, so upkeep and normal maintenance may not have been done by the owner.
   
   
4. The bank will need your finances to look essentially risk-free for them. Pre-approval for your loan is needed in writing before your offer will even be considered. A good credit report is also a big requirement.
   
   
5. It may take more time than a typical purchase to close. Banks keep bankers’ hours it seems when it comes to moving a sale forward. Don’t expect answers over the weekend or swift responses to questions in general. They tend to move at their own pace on these transactions so be prepared for it to possibly take longer than the average sale to reach closing. Naturally, this all depends on the bank that owns the foreclosure.

A foreclosure can be a great option in finding the right home for your family at a reasonable price. If you have patience, time, and are represented by a qualified, experienced REALTOR to help guide and advise you through this specific process, you can successfully navigate your way to affordable home ownership in this competitive market.