4 Tips to Avoid Common Mistakes When Trying to Buy a Foreclosure

If you’re already in the market to purchase a home, chances are you’ve already heard the term foreclosure. By purchasing a foreclosed home, you can snag a great deal during a time when affordable deals may be hard to find. To start, a foreclosure happens when a lender takes a property from an owner who has defaulted on their mortgage and is behind on making their payments. The lender will try to regain as much of the investment as possible by selling the home for less than it may be worth.

In short, the main advantage of purchasing a foreclosure property is the price. Be aware, however, that the process of purchasing a foreclosure can be a complicated one. Any potential buyers who haven’t done their homework, or those who aren’t working with an experienced real estate agent, can make costly mistakes.

Below are some tips to help you avoid making costly blunders while you attempt to purchase a foreclosed property.

Find the right help

Whether you’re looking into a pre-foreclosure, a bank-owned property, or a short sale, it’s important that you have the guidance of a professional real estate agent who has the background and experience working with these types of properties. Your trusted agent can also refer you to real estate attorneys who understand foreclosure laws, regulations, and how these purchases work.

Set a budget & get pre-approved

Knowing how much you’ll be able to spend is always a good idea. Pre Approval letters detail how much money you can borrow based on the lender’s thorough assessment of your credit score and income. Find a mortgage lender who understands your goals, and gather the necessary paperwork to obtain a preapproval letter.

Be ready to buy “as-is”

When buying a foreclosure, it’s important to understand that the property is most-likely going to be sold “as-is”. This means that the seller of the property cannot guarantee that the property’s condition, such as structural issues, are present. This also means that the seller is unlikely to make any repairs since the foreclosure is owned by the bank. This brings up to our next tip.

Don’t skip the inspection

A home inspection isn’t required to buy a foreclosed home, but it can identify major issues the bank isn’t aware of so you can decide whether to move forward with your home purchase or to walk away from the deal. Be present when the inspector is looking at the property and ask plenty of questions while taking notes. It’s going to be up to you to calculate how much it’s going to cost to address any issues and decide whether or not the “affordable” price is actually worth it or not.

Buying a foreclosed home is a personal decision and it depends on a variety of factors, including your risk tolerance, the property’s potential reward, financing and your ability to move quickly. Remember to work with a knowledgeable and experienced real estate agent to help you navigate the process.

Whether you are looking to buy or sell real estate in Bay, Walton, Gulf or Washington County in the Panhandle of Florida, you can be sure you are working with an experienced Realtor that will act as the Bridge between the Buyer and Seller to bring the transaction to a successful closing. Carroll Realty has been helping people just like you buy and sell in the Panama City area for over 30 years. Our team of local agents are ready to help you find the perfect home or that investment you have been looking for. Let us show you all the Panama City and Panama City Beach real estate deals available right now!