With the housing market still down, many buyers and investors are jumping on the chance to get some of the best deals in real estate. Foreclosures can be among the best deals, but there are some very important things to remember before buying a foreclosure.
Home Inspections Are A Necessity. Professional home inspections are one of the most important things to remember about home buying. Even though the home may look nice at a first glance, a home inspection can inform buyers about possible underlying issues, like toxic mold or structural issues. The information from the home inspection report will be able to show what repairs will need to be done in order to make the home ‘move-in' ready, which is critical for both homeowners and investors.
Low Price Doesn't Mean An Amazing Deal. Often when looking to buy foreclosures, buyers will hop onto the home with the lowest possible price. However, doing so ignores external factors which can add value to a home, such as neighborhood, school districts, location, and high crime rates, among other things. As well, a super low price can also mean costly repairs for the home to be habitable, something that some homeowners and investors don't fully factor into their budget.
Don't Jump on a Fix ‘N' Flip. While some foreclosure homes may look like great opportunities to repair and resell a home, oftentimes doing so will be a lot more costly then buyers or investors will assume. A quick rule of thumb on repair costs is to triple whatever amount that the buyer thinks will be enough to repair the home. Always talk to real estate professionals, contractors, and reputable home inspectors before ever attempting to flip a home, regardless of experience. Be wary of the temptation to make quick money - the buyer doesn't know what they're getting into, it can be detrimental and financially draining.
Research A Lender. Even when trying to nab a great deal, it's important to not forgo regular parts of the home buying process. Meeting with a reliable lender will keep buyers more informed of their financials, long and short term financial goals, and try to find the best type of loan for their personal financial needs, instead of just handing them all of the available options for a loan. Always make sure to ask questions about the lending process, including underwriting, rate locks, hidden fees, origination fees, or anything else that isn't clearly understood.
Don't Rely on Pictures. Regardless of a primary or investment home, it is always critical to see the home in person before writing an offer. While it may be tempting to purchase without seeing the home personally, especially to out of state or foreign investors, doing so will result in more harmful consequences than helpful.
Even with all of these possible detriments, if homeowners and investors approach buying a foreclosure armed with as much knowledge as possible, foreclosure homes can offer a great opportunity. Contact us today for more information on great housing deals!
Comments(1)