As you might expect, buying a foreclosed home comes with a certain amount of opportunity as well as the same amount of challenges. Foreclosures are an appealing alternative to buying a home when you are able to find, what you may think is a good deal, since most foreclosures are priced below average market value, but unlike buying a home from a homeowner, when you are buying a foreclosure you are buying the home from the bank and this process can be a little challenging to say the least. When heading out in this direction, keep a few things in mind.
The process is not as personal as would be if working with a Realtor® who represents the family selling the home; in this case, you are working with the bank who may not be in a hurry to return phone calls. In other words, be patient and be prepared to wait for responses.
Because you’re dealing with an agent who is representing the bank, be prepared to have a copy of your pre-approval letter ready, and again, don’t think that you can sweet talk this seller into accepting your offer, to the bank it’s a numbers game and the winner has the highest number.
When searching for foreclosures, you will often find them described as an REO, or Real Estate Owned, property. In other words, it’s owned by the bank after going through the foreclosure process. Again, unlike a normal listing, an REO property does not have to provide disclosures about the property’s condition. It’s important as the buyer here, to do your due diligence and find out as much about the property as possible before going into the sale of the property blindly.
Be prepared to see the inside of the home stripped almost bare! I once took a client into an REO property that was in an upper middle class neighborhood; a 3,000 square foot home that looked absolutely amazing outside! Once inside, my client could not believe what he saw. Holes punched into walls, counter tops gone, toilets nowhere to be found, the stone fireplace destroyed, light bulbs missing, you get the point. Therefore, be prepared to do some major renovation once owner of this new REO property! After seeing all the debris, and given there will be no disclosures available, be aware that you are still allowed to have an inspection done. Get the biggest and best inspection money can buy so you are fully aware of what you are getting into.
Bottom line, there are plenty of great deals out there in an REO property; just be prepared. I know plenty of people who have bought a foreclosed home and didn’t have a nightmare story at all; just make sure that you are getting less than what you bargained for.
Would you consider buying a foreclosed home? What was the strangest thing you’ve seen while shopping or looking at a foreclosed home? Leave a comment with any helpful tips from your experience and don’t forget to share this post on Facebook tagging Real Property Management.
Emily Schmidt is a Sibcy Cline REALTOR® from Beavercreek, Ohio. She has helped clients in both the Dayton and Cincinnati areas find their dream home and sell their current property. Emily can be reached by phone at 937-409-6337 or by email at [email protected]