BluefoxToday blog : 10 Don’ts When Buying Foreclosures

10 Don’ts When Buying Foreclosures

Very strong checklist from John the Housing Guru for anyone planning on buying a foreclosure here in Las Vegas NV. Take a look.

While there are sometimes bargains to be found in the purchase of foreclosures, there are also serious pitfalls. Foreclosures are not for the inexperienced. Use the following to help guide you through the process.

 

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1. Don’t buy a foreclosure in the wrong area. Even if the home is a great deal, if you are planning to live there, you’ll probably regret your decision. Price is never the only factor. And even if you are an investor, if the home isn’t in the area you wanted, it may be better to look for another.

2. Don’t assume that a foreclosure is a great buy. Do your homework. Recruit a Realtor® to guide you.

3. Don’t get caught up in the excitement of a bidding war. Whether at auction or through negotiation, bidding wars frequently result in someone paying too much. Have a pre-determined maximum price and don’t go beyond it. If the bidding remains below your maximum, however, use the tactics in Winning a Bidding War.

4. Don’t buy a home without an inspection. Even if a lender is selling the home “as-is,” your offer to purchase should include an inspection clause with a time limit for your acceptance. With an inspection clause, you’ll be protected and not bound to close if you discover serious problems. Your clause should include an inspection for structure, pests, radon, mold, drainage, and anything else that may be appropriate for the home you’re considering.

5. Don’t buy a property without a title search and without purchasing “owners’ title.” Foreclosures may have problems that failed to be uncovered during the foreclosure process. Protect your investment by purchasing coverage.

6. Don’t expect any type of warranty. You’re buying the home “as is” and will be responsible for making repairs.

7. Don’t expect the bank to make allowances for your personal situation. Banks have been overwhelmed with foreclosures and have neither the time nor the inclination to make exceptions.

8. Don’t try to close a deal without an attorney. While you may be using a Realtor® and “trust” the seller, you need an attorney’s guidance to avoid the potential for certain risks and “super liens” that may survive the foreclosure.

9. Don’t attend a foreclosure auction unless you are totally prepared to buy. That means you must be ready to meet the financing requirements of the auction (usually cash or a letter of credit), that you have full knowledge of the property and the costs of making repairs, and that you are fully ready to purchase. Auctions are attended by professionals (often referred to as vultures”) who both know the true value of the property and the cost of repairs. But they are sometimes attended by cash-rich novices who bid up the price far beyond a home’s reasonable value.

10. Don’t consider a foreclosure until you check out the limitations and requirements in your particular state or area. There are considerable differences between states, and just because you’ve heard of great opportunities in one doesn’t mean the same exists in another.

 

The Housing Guru: The one source for all your housing questions

_______________________________________________________________________________

Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 16 commentsEsko Kiuru • November 24 2009 12:06AM

Comments

Thanks for the reminders. So many people forget their brains in their hurry to catch that "great bargain".

Posted by Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900, Family Helping Families Buy & Sell Homes 40+ Years (Get Results Team...Just Call (408) 252-8900!) over 8 years ago

Great tips! With all the inventory on the market there is something out there for everyone!

Posted by Tricia Hanley (Pacificquest Auction Services LLC) over 8 years ago

All great points to keep in mind -- important to keep perspective.

Posted by Bob & Carolin Benjamin, East Phoenix Arizona Homes (Benjamin Realty LLC) over 8 years ago

Hi Esko, Good post. Thanks for sharing.

Best - Sash

Posted by Sasha Miletic - Windsor Real Estate (RE/MAX Preferred Realty Ltd.) over 8 years ago

Thanks for the post Esko. All gfood points when considering a foreclosure!!

Posted by Pat O'Reilly (RE/MAX..214-289-6176 Irving and all of Dallas Fort Worth) over 8 years ago

Esko, all of these are good points, but number two rings particularly true, but unfortunately many buyers seem to think that Banks are willing to give houses away.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 8 years ago

I just read this OP and it's a wonderful re-blog, Esko! :)

Leilani

Posted by Bob Souza (925) 513-3400 & Leilani Souza (916) 408-5500 Souza Realty - Real Estate Broker in Placer County, California, Homes & Land, Real Estate Investments and Rentals (Souza Realty - Roseville, Rocklin, Granite Bay, Loomis, Penryn, Newcastle, Lincoln, Auburn, Meadow Vista (Placer County, CA)) over 8 years ago

I think #2 should be #1 when there are better investment options (although more frustrating) like short sales! (at the moment!)

Wishing you and your family a Blessed Thanksgiving Day Esko!

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) about 8 years ago

Michelle,

Great primer for a would-be foreclosure buyer.

Posted by Esko Kiuru about 8 years ago

Tricia,

This list will help to know beforehand what may await on the foreclosure market.  

Posted by Esko Kiuru about 8 years ago

Bob & Carolin,

Do your homework before acting on foreclosures will likely make it a good experience.

Posted by Esko Kiuru about 8 years ago

Sash,

Thanks for stopping by.

 

Posted by Esko Kiuru about 8 years ago

Pat,

Can't go wrong when you are armed with the knowledge of this list.

Posted by Esko Kiuru about 8 years ago

George,

Right, it's not as simple and lucrative as it may sound.

Posted by Esko Kiuru about 8 years ago

Leilani,

John sure knows what he's talking about.

Posted by Esko Kiuru about 8 years ago

Renee,

Thanks and belated Thanksgiving Day wishes from here, too.

Posted by Esko Kiuru about 8 years ago

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