Illinois Logo

Back

How To Buy A Foreclosed Home

How To Buy A Foreclosed Home

The foreclosure crisis of the last few years seems to show no signs of slowing down just yet. However, wherever there is a crisis for some there is are opportunities for others. The savvy investor knows many homes selling for a fraction of their original market value. Eventually the housing market will begin to make a comeback and you could be in a prime position to make a killing. Here is what you need to know before buying a property in foreclosure.

Best Practices For Buying A Home In Foreclosure

Don't Fall In Love With A House To Fast:

You can't get into something as serious as investing in a property for the wrong reasons. If you saw a house that is "just darling and you have to find a way to own it", step back and think about it some more. Many homes in foreclosure are being sold "As-Is" and may come with some baggage such as neglect or maintenance issues that need addressing. Exercise a healthy sense of caution and common sense and avoid early disappointments. If you are serious about buying a foreclosed home there are plenty of options out there to choose from and you don't want to reach badly and pay for it later.

Get a Handle On Your Own Finances:

Just like before the bubble burst, many people have diamonds in their eyes regarding opportunities. Investing in property is wise, only if you can afford it. Check your own credit reports with a fine tooth comb, know your debt to credit ratio and think about potential life changing events you have coming up in the next few years. Then calculate how much you can afford for a down payment and review your attractiveness to lenders for a home loan.

Get Pre-Qualified For A Mortgage:

You chosen lender can help you determine what you can actually afford to pay on a mortgage and has resources available to guide you to a good decision. You lender often has leads on local associations, agents and brokers and contractor resources as well.

Know What You Want Ahead of Time:

This goes hand in hand with out earlier point about not falling for the "little girl with the curl syndrome". If you have a clear plan about what kind of home you want, how much money you can realistically afford, what neighborhoods are attractive and any kind of deal breaker scenarios you are likely to wind up happy in the end. If you have a notion not based on reality you are bound to rush into a mistake purchase.

Trust An Experienced Agent

Here is some more Real Estate 101 facts for you: agents with experience selling foreclosed homes have happier customers than less experienced ones who have never done it before. Seek out experienced agents who have extensive resumes selling these types of properties as they will have all of the bases covered and have a good grasp as to whether you are making a good move or getting in over your head.

Don't Do It To Make A Quick Buck:

An investment is just that: something you buy to hold on to for a while and later on turn around and try to profit from. Many people see the opportunity and all of the distressed homes on the market and think as soon as they snatch them up and repair them they will flip them for big bucks. The housing market is coming back, but it will do so slowly and you need to consider the needs and buying potential of the community your property it in before buying.

Make You Own Luck

Getting a good deal often means you prepared better and worked harder than the next person. Sometimes a little bit of luck is involved. Rather than hoping something great falls into your lap really put yourself in the best possible position by considering every angle to find a home. Places like the HUD website, Fannie Mae and Freddy Mac, lenders, local newspapers and circulars, www.craigslist.org and local home auctions are all places where listings live. You need to live and breathe these sources early in the process, as soon as you know what your parameters are going to be for a purchase. You never know what hidden gems you might find.

Share this:

Comments

Leave a comment:

* Login in order to leave a comment. Don't have an account? Join for Free



Become an Expert Contributor

Have some knowledge to share, and want easy and effective exposure to our audience? Get your articles or guides featured on Illinois Homes today! Learn more about being an expert contributor.

Learn More