Buying a Foreclosure might or might not be right for you; there are many factors to consider, personal and outside factors. In this type of real estate market, there is a huge inventory of short sales and foreclosures. It is certainly fertile ground for investors and the barren land for homeowners. First time buyers might benefit of the low prices, however, there are issues attached to foreclosures and buyers should have a clear picture of what they are buying.
Depending on the lender, foreclosed homes can be discounted; it depends on if the lender wants to recuperate as much as it can from the sale of the property. No lender wants to be stuck with a property, so there is always room for good deals.
Not all agents are experienced in foreclosures; some may have handled more foreclosed deals than others may. Finding an agent that specializes in foreclosures will work to the buyer's advantage.
The shape and condition of the foreclosed property varies. Many times, it is in great condition and will require minimal update; other times it might resemble a crime scene or a home after being hit by an earthquake. Many times, homeowners who are angry with the lender will leave the home in less than desirable condition. It is always important to inspect what you are buying, and take as many looks as you can.
Just because it is a foreclosure that does not mean it may be a bargain. A real estate professional can help you compare prices with comparable properties in the area, to see if it is a good buy. A lender will try to recuperate as much money as they can.
Foreclosed properties might have undesirable issues attached to them, but that can happen with any property or home for sale as well. However, a prospective buyer must make sure that there are no liens on the property, unpaid taxes, or title issues. If it is a property in a rural area, it is important to know how the septic systems and well are working. Is the water source reliable, dried up, any other issues?
Each state has different rules. If buying on another state familiarize yourself with that particular state rules on foreclosures. Find a reliable agent in the area.
Consider buying the property at auction, directly from the bank, or from a government agency. Consider pre-foreclosure properties, which allow you to deal with the homeowner directly, and negotiate a great price, especially if the homeowner is not interested in making a profit, but paying the lender what is owed.
Consider short sales, which might sometimes be a better option than foreclosures.
Expect to deal with more paperwork and documentation than the usual. Overall, do your due diligence on the property to avoid surprises.