The In’s & Out’s Of Buying A Foreclosed Property
When foreclosed properties come to mind, so do great deals. The number one reason potential homebuyers and investors consider buying a foreclosed property is the potential to get a great bargain.
Anytime a property has some type of distress there is always potential for a steep discount. And while everyone loves a bargain, foreclosed properties are certainly not for everyone. When looking into purchasing a foreclosed property in Wichita, Kansas, and surrounding areas, it is vital to know exactly what you are getting into.
If you are new to the foreclosure market, there are a few things to stay on the lookout for. Here are five things to consider before investing in your first foreclosure property:
First things first: you need to get your financing in order before you make any type of offer on a foreclosed property. To begin the process of buying a foreclosed property, you need to get preapproved for a loan before even looking at properties. Once you get this done, you should also check your credit score, fix any credit problems, and set aside enough cash for a down payment.
Foreclosed properties can attract a lot of interest and usually, multiple offers. You set yourself up to get a better deal by having your financing ready to go before you make an offer on your dream property.
Look For An Agent Specializing In Foreclosures
When looking online for foreclosed properties, you will run across the acronym REO, which means real estate owned. This signifies the home has been through the foreclosure process and the lender is now selling the property.
Once you find some REO properties you are interested in, get in touch with the agents or brokers handling the properties. Ask them about the properties you are interested in, but also ask about any similar properties that may be coming available in a week or two. The foreclosure process takes awhile and there could be properties that the Coldwell Banker Plaza Real Estate agent knows about and are available, but not in the database as of yet.
The Home Is ‘As-Is’
When purchasing a foreclosed property, you are purchasing a property as-is. This means even if the property is in shambles you shouldn’t expect to get a discount for repairs.
REO’s usually need some type of repair work done. Many times disgruntled homeowners in foreclosure faced with the prospect of losing their home feel like they have nothing left to lose. They tend to leave a home in terrible shape, occasionally even purposely damaging the house. Prior to foreclosure, these frustrated homeowners have been known to strip their homes of anything valuable, including doorknobs and lighting fixtures.
While you can get these properties at a steep discount, there will be a lot of work to be done. While this shouldn’t discourage you from buying, you’ll need to factor the repairs into your calculations. The best way to ensure you are actually getting a good deal is to have the home professionally inspected. When you have the inspector to the property make sure you walk through the house with him or her. This guarantees you have at least a working knowledge of what needs to be fixed.
Know Your Market
Lastly, make sure you have a general knowledge of the make you wish to purchase a foreclosed property in. At the bare minimum you need to know how long it takes to sell a home in your price bracket. Once you have this information, begin to study the sale prices of comparable homes in your area. These two things will give you a general idea about the Wichita home market you are dealing with.