Mistakes to Avoid When Buying a Foreclosure

Mistakes to Avoid When Buying a Foreclosure

The record number of foreclosures currently available presents a unique opportunity for those in a position to purchase a home.  However, great care must be taken to make an educated and prudent choice.

Don't try to do it alone 

These transactions are very complex and not for the faint-of-heart.  You should have a team of professionals that you trust, including an experienced Realtor, a licensed home inspector and a knowledgable attorney.  Foreclosures are highly regulated and differ greatly from state-to-state.  The contracts and addendums must be carefully reviewed to ensure compliance with all local, state and national laws.

Not Accurately Considering Price of Repairs

Get estimates for any repairs the home may need and consider those costs when determining if you are getting a good value.  Cosmetic repairs, such as a fresh coat of paint, are one thing.  Have the mechanical systems of the home been neglected?  Has the house been empty?  Has routine maintenance or a leak been ignored?  Has the house been winterized?  The projected costs of  all of these factors need to be calculated prior to making an offer or make the offer contingent upon a home inspection.

Expecting a Quick "Flip" on The Property

Many factors effect the resale price of the foreclosure.  If many other properties in the area are in foreclosure or at risk of being sold in a distressed situation, it will adversely effect the market comps.  The market conditions may take years to improve.  Carefully analyze the neighborhood and the comparable homes for sale.  Visit the neighborhood at different times of day and observe the condition of other homes.  If many homes in the neighborhood are in disrepair, it will likely negatively impact the resale of your home if you have a short-term goal.  Determine if this is a home that will bring the price you hope to get when you resale the property.

Making an extremely low offer

Some buyers believe that a foreclosure means that the lender will accept any price just to sell the property.  However, this is often not true.  The homes are already generally priced below market value.  Make sure you consider the market comps for the neighborhood, add in any repairs or improvements needed and make your case to support the price you are offering. 

 

 

 

Contact Information

Andy Leung
Keller Williams Realty
1501 Highwoods Blvd #103
Greensboro NC 27410
336-508-1111
336-303-0389
Fax: 336-814-2110