Foreclosure Insider

Quick Tips from a Foreclosure Expert

Article posted: May 22, 2009

The number one topic in real estate today is foreclosures because of the recent economic downturn. Banks are often willing to sell foreclosed homes for up to 20% below market value just to get these troubled properties off the books. With foreclosures at an all-time high in the past year, there’s no shortage of these opportunities to pursue. However, prospective buyers should know that buying foreclosures is often a lot more complicated than a typical home sale.

My experience as a Realtor here in Central New Jersey has provided me with a wealth of knowledge and experience which I am now eager to share with members of FreeNJForeclosures.com. Here’s one of my first installments: five quick tips to consider before pursuing foreclosures.

1. Find Properties in Foreclosures

Thanks to the Internet, it’s easier than ever to find homes in foreclosure. For example, when FNJF was created, one of its main purposes was to provide up-to-date information on homes in foreclosure and other bargains worthy of mention. The Internet alone cannot give you the experience of actually seeing the property or getting more information, therefore a Real Estate agent is essential as you find properties in foreclosure.

2. Avoid Auctions

Many safe ways exist to successfully buy a foreclosure property, buying one at the auction is not one of them. At auctions, you’re buying a home sight unseen and without an inspection. You’ll have no idea whether the home needs repairs and how much they might cos. Some of these properties also owe back taxes, a headache that’s transferred to the new owner. And finally, it most cases, you’ll need to pay cash for the home.

3. Research Home Values

Just because a home is being sold by the bank, doesn’t necessarily mean it’s a bargain. Home prices have fallen dramatically. Now, many homeowners going through the foreclosure process owe more on the mortgage than their property is actually worth. Yet another instance where working with a Realtor is beneficial, you will need research home values to determine if you aren’t assuming an overpriced loan.

4. Arrange Financing First

While it’s always a good idea to get pre-approved for a mortgage before you start shopping for a home, it’s even more critical when you’re shopping for foreclosed properties. Even if you have stellar credit, some lenders won’t make a loan on a distressed property. Other lenders will only offer a mortgage if the house is in decent condition.

5. Get It Inspected

Even if a home is brand new you want to get it inspected. But inspections are especially important when you’re dealing with homes in foreclosure. When people have trouble paying their bills, they typically put off the regular maintenance of their homes. Once a home is seized by a bank, it then sits vacant and falls even further into despair. In a worst-case scenario, a homeowner could be so angry he lost his home that he actively destroys a property before he moves out. Without an inspection, you won’t be able to estimate the costs for repairs or be able to report the home’s true condition to your lender.