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Things to Avoid When Buying a Foreclosure

Thursday, 28 August 2008

Things to Avoid When Buying a Foreclosure

Friday, 20 June 2008

Buying Foreclosures in todays real estate market has become a big thing. However, buying a foreclosed home is no cakewalk. It can be a real good way to lose a lot of money for a purchaser who isn’t knowledgeable and careful.

Here are some tips to consider for anyone interested in the foreclosure market.

Avoid outstanding liens. Make sure the property has a clean title. Any outstanding liens and fees incurred by the original owner will be transferred to the new buyer.

Bid conservatively. The market in many places is still depreciating. That unknown added to transaction, repair, and marketing costs could sour the deal.

Beware foreclosure concentration. Prices in neighborhoods where there are lots of foreclosures have declined the most – and prices in these areas are still declining. A buyer should confirm that there’s an opportunity to make money if prices fall another 15 percent.

Beware the appraisal. If the price is discounted from an appraisal done before August 2007, it is almost certainly unrealistically high.

Cash is king. Even a buyer with a renter lined up and enough money for a 20 percent down payment needs still more cash to weather another two or three years of a depressed market before unloading the property.

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