Buying a Foreclosure - It's Not a Slam-Dunk

Buying a foreclosure - it's not a slam-dunk.                 

Just a few years ago, foreclosures were almost unheard of in the North Shore communities of Winnekta, Wilmette, Kenilworth, Glencoe and Northfield.  Only far off Evanston had a few foreclosures that most agents from the North Shore never had any reason to deal with.

We all know now that things have changed.  There are 4 total foreclosures in Winnetka, Wilmette, Kenilworth, Glencoe, and Northfield (and 33 short sales.)   Most buyers think that a great deal is in the offing - and it can be but nothing is certain when dealing with foreclosures.

First of all, the bank now has control.  Different banks have different procedures, but usually  more paperwork is necessary.  As an example, all banks require a pre-approval letter and if you're not ready with yours, you may lose out.  Any serious buyer should be prepared with this information, but it's vital with an offer for a foreclosure.

Even if  you are making a cash offer you will have to provide proof of funds.  This can include bank statement, a letter written by a financial institution, or a certified check for the entire purchase amount. 

In addition, the bank may not provide any disclosures, tests, or a plat of survey.  If you're considering a condominium, no condo docs will be supplied.  The sale is considered "as-is" and the seller makes no warranties as to the working order of anything in the home.  Most foreclosured homes in the northern part  of the country are winterized and will not be de-winterized for either the inspection or the closing.

Delays may cost you - anywhere from $50 to $200 per day for any delay caused by the buyer, the buyer's agent, lender or attorney. 

Lastly, don't assume that you're the only one trying to buy the house.  When prices come down as much as they have there may be several buyers vying for the property.  If that happens, the bank will ask for you to submit your highest and best offer so oftentimes foreclosures sell for more than they were listed for.

I don't mean to scare anyone off of a foreclosure purchase - just procede with caution and make sure you're in the hands of professionals.