Buying Foreclosures

Do you have clients out there looking to get a great deal among the many foreclosed properties? Why not? Foreclosed houses are everywhere you turn in this market. But while their sticker prices are low, buying one can be a risky endeavor. This is mainly because with a foreclosure you won't have the same protections as you would for a conventional house.

However there are ways to protect yourself, so let your clients know that they CAN get that great deal they've been after, but they have to do their homework.

1. A lot of the buyers are subscribing to fee based foreclosure listings companies to get the "bargains' lists". Let them know that they don't have to pay anything for it. They can find free information on foreclosed homes in the area by checking with a local agent - YOU. Usually there are a couple of people who specialize in foreclosed properties at any broker's office, so, if foreclosures are new to you, check with these experts.

2. Always do a home inspection. I always recomend this, but for a foreclosed property it is especially necessary. The property may have been vacant for a while, maybe vandalized; fixtures and appliances may be missing and more. Even though most foreclosures sell "as is, where is" you want to make sure what you're getting does not have any hidden problems. Also, with the water and electricity having been shut off, it will be impossible to test for any leaks or defficiencies in the plumbing or electrical systems. The inspection will cost between $250 and $400, depending on the size of the house, but it will give you a full report as to what you are buying and also a list of the items you will need to have repaired or replaced. Worth every penny!

3. Tell then to have a plan B (a backup property), just in case the sale does not close. In some states, a homeowner may have up to 6 months after the foreclosure to pay any outstanding debts and reclaim the home, so make sure to get as much information as you can and do not assume anything.

4. Purchase Title Insurance. The title insurance will protect your client against any liens that you might not know about. With foreclosures, usually come other debts, liens and such that might still be outstanding. Having insurance will protect the buyer from all that, as well as, prevent a previous owner from making a successful claim on the house you just bought.