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Tips on Buying Homes in Foreclosure

Tuesday, April 17th, 2012

Tips on Buying Homes in Foreclosure

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Christine Argier

Christine Argier began writing in 2004. She has contributed to several online publications and served as managing editor of “V Magazine” at the University of Virginia. Argier holds a CompTIA A+ certification, as well as Microsoft Office Specialist certifications in Word, Excel and PowerPoint.

By Christine Argier, eHow Contributor
Tips on Buying Homes in Foreclosure thumbnail Foreclosed homes sell for about 25 percent less than market value.

When a homeowner can no longer afford payments on his home, sometimes a foreclosure takes place and the ownership is given to the bank. Those currently looking to purchase a home can take advantage of these foreclosures since, according to ABC, foreclosed homes sell for about 25 percent less than market value. Buying a foreclosed home poses different challenges from a traditional real estate sale, but following a few tips will ensure that you come out ahead.

  1. Find Foreclosed Homes

    • Foreclosed homes are listed in the legal section of the newspaper and often in the regular real estate classified advertising section as well. Scour the listings carefully to look for foreclosed homes that are in the areas you desire. You can also call the local recorder of deeds and inquire about any foreclosed homes in your area and get the contact information for the seller.

    Use a Specialized Real Estate Agent

    • You can look for foreclosed homes on your own, but enlisting the help of a real estate agent often pays off. Real estate agents have access to all the home listings in your area and some even focus solely on foreclosed homes. Find an agent that you trust and let her do the house hunting for you. Doing so will help narrow down your search and save your time.

    •  Set Up Financing Ahead of Time

    • Make sure to visit a lender before you begin your home search so you know exactly how much you are eligible to borrow and have the funds available immediately. Foreclosed homes tend to sell quickly and if you have to delay closing because you’re waiting on a lender, you could miss out on a great deal.

    Inspect the Home Thoroughly

    • Before purchasing a foreclosed home, it is imperative that you hire a home inspector to thoroughly check the home. Since foreclosed homes are sold as is, many require updates and fixes before you can move in. Consider how much you will need to spend to fix up the home before you finalize your purchase. In some cases, the cost for the fixes outweighs any savings gained by buying a foreclosed home in the first place. Homes with mold, rotting wood, pests or structural damage are usually the most costly to repair. Make sure to avoid any properties that you feel will be too expensive or time-consuming to fix.

    Consider the Neighborhood

    • Just as you would with a traditional real estate sale, make sure to carefully examine the home’s neighborhood before considering a purchase. A house with a desirable price tag sometimes causes buyers to overlook the neighborhood. Keep in mind that you can fix the interior and exterior of a house but you can’t change its location

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