1) Understand the different types of properties
Pre-foreclosure or short sale properties are still under control of the homeowner, therefore both the homeowner and the lender must approve any offers that come through. Short sale properties are usually in better condition because the homeowner has taken action to prevent foreclosure.
Auction properties are typically awarded to the highest bidder and are cash only sales. The lender can't make a profit at an auction sale, so the best deals go to the investors and bidders.
Real estate owned (REO) properties are in full possession of a lender because no one bid a high enough amount at the initial auction. At this point, lenders are typically eager to get the property off of their hands, but keep in mind that the properties will be in worse condition by the time they get to this stage.
2) Get preapproved for a mortgage.
Unless you plan to pay cash or bidding on auction properties, you’ll need a recent preapproval letter from a lender. A pre-approval letter will detail how much money you can borrow, it is based off your credit score and previous financial history.
3) Know Your Numbers
Know your numbers before you buy. It's expensive to keep rental or fix and flip properties without tenants. Does this neighborhood have a quick turn around on homes? Is this house in need of lots of repairs before it can move to market? Elevation Realty, can help you get your numbers straight and find the perfect fit for your family.
4) Never skip the inspection.
Foreclosed homes may sit on the market for a long time, leading to a lot of problems that have gone unrepaired. In many cases these homes may have been previously owned by disgruntled owners that damaged the interior in some way. Never purchase any property without first going through a through home inspection. You never know what might be hidden in the walls or the floorboards. Hire a qualified inspector to know for sure.
5) Remember, the home is sold as-is.
You may get overly excited to see a low price on a foreclosed home, but keep in mind that purchasing the property is not the only expense that comes with owning a home. Many forclosed homes will need repairs, so before making an offer be sure to know how much of your budget you are willing to spend on repairs.
6) Get a helping hand.
Foreclosed properties are heavily regulated, and each state has its own set of laws. When you’re ready to look into buying a foreclosed home, be sure to find a real estate who has experience in dealing with foreclosures. Although every real estate transaction can be complex, there is an added layer of complications and legal regulations that come along with foreclosed properties, so you need to have an experienced professional, like Elevation* Group, by your side.