If you’re a patient person and are willing to do some due diligence, you can get a great deal on a house by buying a bank-owned foreclosure.
In fact, this is a great way for a first-time homebuyer to get into an affordable home. Foreclosed homes typically sell for as little as half of the market value.
Check with your realtor for foreclosed homes in your area, and visit the U.S. Department of Housing and Urban Development’s Web site to find a list of its foreclosures for sale in Arizona.
Here are Rosie’s tips for buying a foreclosed home:
- Learn which stage of foreclosure the home is in. If you buy from a seller who is trying to avoid a foreclosure, you will help the owners avoid a foreclosure and you will skip some of the hassle that comes with buying a foreclosed home.
- Get pre-qualified by a bank before making an offer on a home. This will ensure that you are able to afford your new mortgage, and it also could give you some leverage in negotiating the price of the home.
- Hire a realtor who has experience dealing with foreclosed properties. Make sure your agent is a “buyer’s” agent who will help you find the right property and get you the best price. A “seller’s” agent can sell you a home, but he or she works for the homeowner, not for you.
- Do your homework. Buying a home in foreclosure can be a great deal, but it also can be riskier than buying one from a seller in good financial standing. Hire a home inspector to uncover hidden problems and to give you a realistic picture of how much it will cost you to repair the home so it’s livable and meets building codes for safety. Get an appraisal so you’ll know the real value of the home. And be sure you know every hidden cost involved in the sale.
- Negotiate your best price. Some banks want to unload foreclosed properties as quickly as possible—and will entertain low, low offers. Others, however, are willing to sit on property until someone offers them a higher price. If you’re dealing directly with a homeowner who is trying to avoid a foreclosure, be prepared to deal with a difficult seller who likely is handing over the house under duress.