The current state of the economy has caused a flood of foreclosed properties on the market. Many home buyers are taking advantage of the extremely low cost of a foreclosed home. A foreclosure occurs when a property owner fails to make the payments on his or her loan which leads to the property being seized and sold.
There are generally two options when buying a foreclosed home. You can either purchase the home from the lender/bank, or you can purchase the home from a foreclosure auction or sale. Because the process is very different for each, this article will specifically focus on bank foreclosures.
Listings of foreclosures can be obtained from most banks. Some agents and brokers who specialize in foreclosures may also assist you in finding foreclosed property for sale. Consider the following tips when looking at a foreclosed home:
Inspect the house very carefully. Many foreclosed homes have previous homeowners who did not maintain upkeep on the home or the landscape. Sometimes the repairs are minor, but take into account any unexpected repairs when budgeting. You may want to contract a private inspection to give you a better indication of the cost of repairs.
Evaluate the neighborhood. Knock on your potential neighbors’ doors to ask them how they like the neighborhood. Research the crime rate in the area as well.
Have an agent find the prices of comparable homes in the area to ensure you are actually getting a good deal.
Once you have found a foreclosed property you are considering buying, go to the County Recorder’s Office. The County Recorder’s Office can provide you with the Trust Deed, the Notice of Foreclosure Sale, and the Notice of Default on the property. These documents are public record and reflect how much was originally loaned to the homeowner, when the loan was issued, how much was owed at the time the Notice of Default was filed, and how much the bank paid for the property. Since there are usually no concrete rules banks follow that determine their bottom-line price, these documents will help you explore the lowest possible price the bank is willing to sell the home for.
Foreclosed homes are often offered at a significant discount at upwards of 30% or more, so if you are in the market for a bargain, a bank foreclosure may be a great option for you.