With the recent crash of the real estate market, foreclosures abound and seem like a great deal for many. After all, who wouldn’t want to save money on a home purchase? But SHOULD you pursue a foreclosed home? It’s important that you consider the following before jumping in:
- Banks can be very frustrating to work with. Red tape surrounds these purchases so be prepared to jump through a lot of extra hoops and do a ton of extra paperwork. And keep in mind that communication can be very difficult. Don’t expect a simple transaction!
- What kind of financing do you have? It is the rare foreclosed home that needs no work. If you have FHA, USDA or VA financing, your lender will expect the property you buy to meet certain property conditions. Be aware of this as you tour the home. The owner of the property will likely not be making repairs on your behalf, so make sure the home is finance-able in its current state. A Buyer’s Agent with experience purchasing foreclosed homes is a must. Access to cash or a rehab loan are always best when shopping foreclosures.
- Is your situation time sensitive? Do you have a home to sell or are you facing another time restriction? Foreclosures may not be your best best if you don’t have a lot of time flexibility. A Hubbard Clause is unlikely to get accepted and timing can be unpredictable. Some lenders will want you to close very quickly and others may run into unexpected delays.
Last Updated on September 6, 2017 by Minna Reid