How To Buy A Foreclosure Home

February 14, 2008 – 4:00 pm

by Davion Wong

Did you know that to buy a foreclosure home is a viable option for you if you have a small budget? However, purchasing a property in this manner is not as straightforward as with any conventional purchases. You do need to have a little bit of knowledge which you would learn here. At the end of the day, you would find it worthwhile to buy a foreclosure home when you realize that it is an effective way for you to own your dream home within your budget.

There are 11 basic steps to buy a foreclosure home.

1. Be mentally prepared that the property was seized from the previous home owner for defaulting on the mortgage payment. In other words, there are legal steps to be taken which would be different in each state.

2. Assess if making an offer is worthwhile. Normally, the banks would like to recover partial if not all of their loans. Because of this, they are often willing to off load the property at up to 30% off its value.

3. Get yourself an experienced foreclosure agent. In most cases, the sellers prefer to deal directly with the buyer’s representation.

4. Look up the local newspapers especially the classified ads corner as well as the home magazines. Also contact the authorities and real estate lenders. Places like Department of Housing and Urban Development (HUD) are places to start looking for foreclosures. Since the foreclosed home would be listed in the local county’s office, it is a great place to search.

5. Inspect the property. Check the surroundings as well as the property itself. You would be pleasantly surprised to note that many of these homes are in good condition.

6. Get your agent to find out what is the fair value for the place you are getting when you buy a foreclosure home. There is no point going through the trouble of getting foreclosed properties if the discount is insignificant.

7. Check if your finances are in good health. If you have a bad credit report, see how you can fix that. This is necessary since you would have to apply for mortgage subsequently.

8. Get your agent to liaise with the seller’s broker to make an offer to buy a foreclosure home.

9. Confirm that the foreclosed house is clear of all liens and if there are, who would be responsible for paying them. Do not miss this one. See if there are liens like unresolved property taxes that need to be paid.

10. Request seller to grant a house inspection. This is where you engage a qualified person to carry out the inspection of the structural integrity and general details of the home. This bill is solely borne by you so do set it aside.

11. When you buy a foreclosure home, expect paperwork and some administrative papers to clear. This is normal procedures.

These are the 11 tips that can get you started to buy a foreclosure home. Check out my property site for more details on the exact steps to do so.

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Tags: Bankruptcy