The Process of Buying a Foreclosed Home
A foreclosure is seen as the process by which a lending institution tries to recover part of the outstanding mortgage balance from a homeowner when they default on payment. Lending institutions go about this by simply selling the home at a foreclosure auction price. For most people, their single and greatest opportunity of becoming homeowners is all tied around foreclosed or real estate owned homes. There exist several local federal and private programs to help potential buyers navigate the path to their first time home ownership. Buying a foreclosed home in Miami can be a great investment opportunity for both real estate investors and first time home buyers. Since the process of buying a foreclosed home is not like the typical home purchase, your only problem is having the required knowledge to go about the buying process.
Read further and have some guides on how to go about buying a foreclosed home:
Understand the Foreclosure Process: It is important to have a clear knowledge of the foreclosure process before trying to get involved. Lending institutions foreclose on the property and then tries to sell it in an attempt to get back their money. It is normal for lenders to sell foreclosures at discount.
Get a Real Estate Broker: The second step of buying a foreclosed home is getting a real estate broker by your side. You need a real estate broker who has direct contact with banks that own foreclosed homes. You might consider visiting any real estate site that offers foreclosed homes. Check out a site that lets you filter the results to just foreclosures.
Be Pre-approved: If you don’t plan on making a full cash payment, you’ll need a approval letter from a lender. The pre-approval letter is to prove that you qualify to make the purchase. The letter will include your borrow limits based on lender assessment of your income and credit score.
Look at ‘Comps’ Before Making an Offer: There is no rule that state the baseline on foreclosed property prices. Just as a normal real estate purchase, you need to look at comparables before making an offer. Check out recently sold comparable properties around your neighborhood to make a relevant and competitive offer. Banks are known to start with very low prices for the home and they will receive multiple offers within hours and make their decision.
Make Higher Bids if Homes are Selling Quickly: You should understand that, foreclosed homes are normally sold as-is. This implies you should never expect to get a discount that compensates for repairs. If you really need to buy the property, be sure to be among the top bids to get approved.