By: John C. Allen – Sarasota FL real estate
If you are looking for a way to save money when buying a home, you might be considering purchasing a home that has been foreclosed upon. While purchasing a foreclosure can certainly help you save money, there are a few things that you need to keep in mind to ensure your interests are properly protected throughout the entire process. Consider the four points below and spend the time and money upfront so that you can tell if the property is the great deal or not.
Have Cash Ready
When purchasing a foreclosed property, you will often need to pay with cash. Most lenders will not consider an offer with a financing contingency. When purchasing at an auction, cash will almost certainly be required to walk away with ownership of the property. Even when purchasing directly from a bank, you may not be able to obtain a mortgage loan because of the condition of the property. Therefore, you should be prepared to pay cash if you wish to purchase a property that has been foreclosed upon.
Protect Your Future with Title Insurance
When purchasing a home that has been foreclosed upon, it is essential to purchase title insurance in order to keep your investment protected. Following the “robo-signing” scandal that resulted in many lenders
suspending foreclosures, many homebuyers have been reluctant to purchase a foreclosure. Not just because these suspensions made the process more difficult, but also because of the questions that loomed regarding what would happen to the buyer if the home was found to have been wrongly repossessed. So long as you have title insurance in place, this will not be a concern for you because the previous owner will simply be compensated for they lose while you retain ownership of the property.
In addition to providing protection from robo-signing issues, purchasing title insurance will also provide you with protection from issues that may be lurking in the property’s past. For example, your title insurance coverage will protect you from undiscovered liens, defects in the documentation, forged signatures and other issues that may arise.
Have a Home Inspection and Be Prepared for Making Repairs
Almost all forecloses are offered “as-is,” meaning the bank will not make any repairs to the property. While some foreclosed homes are still in good shape, most are in need of some sort of repair. A thorough home inspection will help you understand the real condition of the property. Many properties appear to be in good shape on the surface, but have major issues that could turn a great deal into a nightmare. Even if the owner took care of the home before it was seized, most real estate owned properties sit for months before
they are sold. Therefore, many are in need of repair before they can be moved into or before they can be resold.
Work with a Realtor Experienced in
Foreclosures
While some buyers purchase foreclosed properties through auction, most purchase foreclosed properties through the banks that have seized them. To make the process as smooth as possible, it is best to purchase your foreclosed property with the help of an agent who is experienced with selling real estate owned by a bank.
Buying foreclosures can be a great investment and save you a lot of money, but it is critical to do your homework before signing you name on the dotted line. Assemble an experienced team of REALTORS, home inspectors, and real estate attorneys. Do all your homework ahead of time so that you can make a smart decision and protect your investment.
