Foreclosures are abundant in today’s real estate market. Bank owned homes often represent an awesome opportunity to purchase property well below market value. Foreclosure listings are a distressed sale and require special considerations.
Because buyers are excited about the potential deal, they sometimes overlook some common pitfalls when purchasing a bank owned home. Common sense applies when purchasing any property, including a foreclosure listing. Make sure to consider the following five things before purchasing a REO home.
- Get a home inspection. Foreclosure properties are sold as-is often after being vacant for months or years. Although most corporate sellers do not make repairs, it is good to know what exactly is wrong with a property prior to purchasing it.
- Make sure your contract includes title insurance. Title insurance is a buyer expense in some REO transactions. This is a very important aspect to protect a buyer from future title issues and marketability.
- Research values carefully. Understand the neighborhood and recent sold comparables in the location of the new purchase. A licensed real estate agent can assist in this evaluation.
- Be patient. Understand that sellers have various timeframes associated with processing transactions and approving offers. It can sometimes take a week or two to negotiate a new contract.
- Insure the property at close. Insurance companies are becoming sticter and more expensive (especially when insuring vacant properties). An uninsured property (even when purchased with cash) is a liability and should be appropriately insured.