What You Should Know Before Buying a Foreclosed Home
When it comes to buying bank-owned properties, there are a lot of pro’s and con’s, and several do’s and don’ts.
Usually the major advantage of buying foreclosed home is the price. That is because the property is considered a bad asset by the bank or mortgage company that owns the property, so they need to get rid of it quickly. Pricing on foreclosed homes can be anywhere from25% to 75% or more below market value, so the potential financial advantage of buying a foreclosed home can be very substantial. Another advantage of buying a bank-owned property is that the homes are often vacant, which makes the move-in process run a little more smoothly; Maryland movers can simplify the moving process even more.
Before you go on the hunt for bank-owned properties, however, be aware of a few potential disadvantages. With these properties the sale is usually “As-is,” meaning that there will be no warranty or recourse for problems found after the sale is completed. If possible it is a good idea to have the property evaluated by experts in the field of home maintenance and repair before making an offer. All repairs and maintenance will be done at the buyer’s expense. And remember that in dealing with a financial institution-seller, there will usually be very little room (if any at all) for negotiating the price or the terms of sale. It’s also probable that you will not have much one-on-one attention from the broker or realtor that is representing the bank. Buying a bank-owned home is a process that can take a lot of time, patience, perseverance, and resilience.
If you are looking into buying an REO (real estate owned by a bank) property, there are a couple of things you should do long before you go out and hire Maryland movers. The first thing to do is to obtain a pre-approval letter from your own financial lender indicating the loan amount you are eligible at that institution. Never wait until you have found the property that you want to buy before getting pre-approved. REO properties are often bought within a few hours of being listed, which gives you no time to get pre-approval for the purchase before it has already been sold to another buyer.
The other thing to do is to find a realtor that work exclusively with distressed properties. Chances are, you won’t actually buy the first REO property you set your sites on. And it’s not likely that you’ll even get the second or third. If you’re working with an agent who has access to multiple bank-owned properties, you are more likely to end up with an advantageous purchase.
The last bit of advice has to do with deciding how much to offer for the property. It’s a tricky dance to perform. First of all, you need to know how well the property has been priced by the seller. If it is priced low, offer a little higher. If the asking price is higher than comparable properties, consider offering a lower amount. Remember that by offering a lower price, you risk losing the purchase to a higher-bidding purchaser, so a good rule of thumb is to always offer the maximum amount you are willing to pay instead of risking the deal to save a couple thousand dollars.