Posted on: 29 December 2016Share
Purchasing a foreclosed home from the bank is often a good way to get a great home for less than it's really worth. However, the process of buying a foreclosed home can also be challenging. Here's a look at some of the challenges you may encounter during the process, along with some tips to help you overcome them.
Challenge #1: Waiting on loan approval.
You find a home you like and you want to put in a bid, but first you have to wait for your mortgage application to be approved by the bank. In the meantime, you lose the home! This scenario is all too common among those who shop for foreclosed homes. Luckily, there's an easy solution. Apply for mortgage pre-approval before you even start shopping. Once the bank approves your loan, they will also tell you exactly how much they are willing to lend you. Then, you can put in a bid with confidence as soon as you find a home you like.
Challenge #2: Getting the house inspected on time.
If you find a house you like, you don't want to lose it to someone else while you're busy making an appointment with a home inspector. It's a bad idea to forego the inspection, too, since it may reveal an issue that makes the home seem less appealing. You can get around this by making an offer "contingent on passing inspection." For instance, when you find a home you like, you can offer the bank (seller) $80,000 contingent on the home passing inspection. If it fails the inspection, you're under no obligation to buy.
Challenge #3: Getting information about the home from the bank.
To a bank, selling a foreclosed upon home is nothing more than an asset. The bank won't usually want to discuss things like whether the bedrooms used to have closets and were remodeled or whether the pipes have been replaced in the last decade. They just want to get rid of the home and reclaim what money they can as soon as they can. This means you can get a good deal, but also that you'll only ever get limited information about the home.
A good way around this is to work with a reputable realtor who has experience working with foreclosures. They can often talk to local permit offices to find out more about work that was recently done to the home. They may also look into previous sales of the home to see what previous sellers disclosed about it. If you are looking for homes for sale, contact a local Realtor.