Real Estate buyers are obviously looking for the best properties at the lowest prices. Lenders are often willing to sell those properties for pennies on the dollar to qualified buyers, simply to be out from under them.
When a buyer is planning to borrow money for the purchase of property an essential step is to meet with a lender and secure a pre-qualification letter. This letter will also be required to bid on a property at a foreclosure auction. Cash buyers are obviously the most appealing to banks and mortgage lenders.
The next step to buying a foreclosed property should be to contact a qualified real estate professional. The agent will be able to provide the buyer with a list of foreclosed homes in the desired area. Additional list may also be found on the internet and by calling banks and mortgage lenders to inquire about public foreclosure auctions.
Buyers should do their due diligence and research recent sales in the area. Often, a property that has been foreclosed sells for 10 to 25 percent below market value. A buyer should search county records for any existing liens on the property, such as unpaid property taxes and assessments. A home inspection can be, and should be, done at the expense of the buyer; However, the seller will most likely not be willing to pay for repairs.
Before attending the real estate auction; determine the maximum bid. Emotion should be left out of this sale. Foreclosures are not dollhouses with picket fences. A buyer should always visually inspect the property they are interested in buying. They often require a substantial deal of repair and refurbishing. The cost of rehabbing the property should be taken into consideration.
Another challenge that buyers may encounter are tenants, owners and squatters. If someone is currently occupying the property, buyers beware. The new owners may become responsible for evicting the current residents, which can be a long and complicated process. Your agent should refer a competent real estate attorney for this process.
Before bidding on a foreclosed property the buyer should have all the necessary financial information. If you have the winning bid, will a portion of the selling price be required? Should you bring a certified check to the auction? It is the buyers responsibility to find out the amount needed before the day of sale.
The pitfalls of buying a foreclosure involve time and paper work. However, if you have the time and patience, you may find on your dream home.
At Century 21 Sunbelt Realty, we have real estate professionals who specialize in foreclosures and will make purchasing a foreclosed property a much simpler process.