Due to the recent global financial crisis the housing market has been greatly affected, bring real estate values down while forcing local management to sell foreclosed properties quickly at low prices in order to minimize their loses. While for many this was a huge downfall that caused problems and losses, some people see an advantage to buy a home at a very low price, some clients even buying them in bulk for just a few thousand dollars. These are people who have done their research on how to buy a foreclosed home and you could do the same and buy your first house or simply invest in multiple properties if your mind is on the future of the market.
Steps to take
If you are thinking how to buy a foreclosed home first, you should consider your budget and the potential risks due to extra expenses. A low price tag may attract you, but what if the house requires extensive repairs. In that case, you will need extra resources for materials and hiring personnel. If you plan to build yourself a business by rehabilitating such a house in order to offer it for rent, you need to plan ahead in the case you don't find any tenants because there will be repairs, taxes and maintenance costs for you to focus on. If you carefully analyze the situation and plan ahead, the risk will be minimum.
The next step is to find a foreclosed home. There are real estate websites out there (local and nationwide) that will allow you to search and filter results to only include foreclosures. And if you are looking to use a real estate broker, find one who works with banks and own foreclosed homes.
Call them about the listings that you are interested in, but also ask them if there are any listings that will come available soon. Many of these brokers have long standing partnerships with these banks and they have knowledge about listings that have not yet come available! You will also want to get a preapproval from a lender.
After that, you will want to see the house personally. There is risk involved when buying something unseen you can be fooled by the description offered and might be surprised that the house is in a worse state than advertised. The property has to be seen and evaluated to further minimize risk.
When evaluating the house itself, it is best to also evaluate the neighborhood's standing. There is no point in buying a property in a neighborhood high in crime or where too many foreclosures exist. This will limit your investment severely. When purchasing a property, it is best to think how to buy a foreclosed home the smart way with minimum investment and maximum value.
During this evaluation, the buyer should also question the vacancy of the property. The longer it's been empty, the more it will be damaged and requiring investment in repairs.
Most advisable would be to hire a professional third party to inspect and evaluate the home before buying it. There could be unnoticeable damage to the untrained eye or copper plumbing could be missing or cracked. It's not unheard of for previous owner to steal certain parts, which can prove to be of value.
Thinking about these tips on how to buy a foreclosed home will help you immeasurably when considering a purchase, especially if you do not expect to make a profit straight away. It will take some time and investment to turn things around, but when done right, it can turn into a big prize.