If you are an aspiring homeowner or property investor who has a limited budget, you have probably considered looking for foreclosed properties. Foreclosed properties, also known as repossessed homes, are properties that have been seized by the bank because the previous homeowner failed to complete their monthly payments.
Many times, you can get foreclosed properties at a cheaper price than regular property listings. You can even find many great deals that might surprise you. However, you must still be careful when looking for foreclosed properties as you might chance a house that’s full of structural damage and hidden issues.
So before you buy a foreclosed property, here are some things you need to consider:
1. Determine your purpose
When looking for foreclosed properties, the first thing you should decide on is what you want to do with it. Are you buying it to live in it? Or are you planning to buy the property for investment purposes?
Knowing your purpose will help you know where to look and what to look for. You and your buyer’s agent will be able to do proper market research and will be able to eliminate choices that don’t fit your qualifications. It’s easy to fall in love once you see a good deal, even if it doesn’t have the features you need or it’s not in the ideal location.
2. Home inspection and title search
Once you spot a foreclosed property that’s ideal for you, consider conducting a thorough home inspection and title search. Many foreclosed homes have been neglected or abandoned by their owners, some even for years. While you can expect that it won’t be in its top shape, checking for foundational cracks, problems with pipes and roofs, and other structural and wiring issues can help you determine if it’s worth the price.
Since most foreclosed properties are sold on an “as is, where is” basis, you’ll get a chance to be prepared on how much you’ll need to to budget on repairs once you buy the house.
3. Learn Property’s History
Do your research and learn about the property’s history. Once a property is acquired by a bank, there is little chance that they’ll know the history of the property including any repairs and maintenance done in the past. The banks will not always reveal this information to the buyer. An experienced buyer’s agent knows how to find this info.
To learn the history of a property, you can try to look at any public records available and ask around the neighborhood. Your buyer’s agent can also help you with the background check because of their extensive network and connections. With a limited source of information, what’s important is to know some background on the previous owners, why the house was abandoned, and if there was anything that happened before that you should worry about.
4. Apply for a mortgage lender
Make sure that a mortgage lender has your back when buying a foreclosed property, especially if you are planning to get it through a property auction. Banks are often in a hurry to sell foreclosed properties off, so you don’t want to risk losing a property that you’ve been eyeing.
Check your finances and apply for a mortgage first, before you make any commitments to buy a property. With money and paper on hand, this will help you secure the property without any problems.
5. Think about extra costs
Buying a foreclosed property might seem cheap, but you need to consider the costs of all the repairs and maintenance needed. Some houses need more work than others and sometimes it’s all about finding a good deal. When calculating your budget, always think about the extra costs you need to spend to get the property in top shape.
Buying a foreclosed property definitely has its pros and cons. Once you find a great deal, you can definitely turn that abandoned house into your dream home or a great source of income.
A buyer’s agent has the expertise to help you find a great deal. With their years of knowledge and experience, you won’t have to worry about houses with red flags or hidden problems. Buyer’s agents will definitely help you from the start of your home buying journey until you close the transaction.
Contact Buying Perth Real Estate for a smooth and hassle-free home buying process at (08) 6215 0200 or 0412 926 190 and get a free consultation from us.