When you’re looking to buy a property for a decent price, buying a foreclosure might just be the ticket. But to avoid any complications and to help minimize the risks, it might be wise to know about some of the potential issues you might face with these types of properties and what you might be able to do to avoid them.
Have a look at these seven things to keep in mind if you’re thinking about purchasing a foreclosure.
Get pre-approved for a mortgage. Foreclosure properties might move fast, and going to your lender to get pre-approved for a mortgage might be in your best interests. When everything is in place, it’s easier for your agent to move quickly on your behalf.
Not all foreclosures are good deals. Many people make the assumption that when a property is a foreclosure, they’re likely to get a good deal on it. That’s not always the case. Do your homework on the property and make sure the price is right before moving ahead.
Title search. If you enlist the help of a lawyer to do a title search on a foreclosure property, you’ll be able to see if it has any liens, violations or judgements against it. This might help you to decide as to whether it’s worth an offer.
Stick with a property type you know. Gambling on property type you don’t have any experience with, even if it does seem like a steal, may not be in your best interests. In many cases, foreclosures can only be inspected from the outside, so you should have some experience with the type of property you’re considering buying to be able to spot things like structural problems, shoddy additions and the like.
Get a feel for the area. Never buy a foreclosure without actually seeing it. Have a drive around the area and get to know what’s around. Doing so may give you an inkling as to what the property might be worth and whether there are things that could cause problems with resale—like the closeness to train tracks or nearness to a noisy industrial area.
Get help. Don’t go the foreclosure route alone. Real estate agents have local market experience and will help you in your decision-making. Also, get the help of a lawyer and a mortgage specialist.