The Monarch Group Real Estate Blog

5 Tips on Buying a Foreclosed Home

5 tips to buying a foreclosed home:

In today’s market we have a large inventory of foreclosed homes to choose from. Many times these homes will offer great financial return in the future, but other times they will not. It’s best to do all your research before purchasing a foreclosed home, and using these 5 tips will help you get started!

  1. Find an agent who knows foreclosures. The more of these foreclosed deals an agent has done, the better familiarized they are with the intricate details that go along with submitting an offer (e.i must be in blue ink). 
  2. Get pre-approved for a mortgage or get your “proof of funds” ready. If you’re getting a loan to purchase the home, make sure you have your documentation from your lender. Often times you are required to submit lender and loan information with your offer. If you’re paying cash, you must show the funds are ready and available.
  3. Know how long it takes. These homes DO NOT close quickly (especially if you’re getting a loan). Be ready to sit and wait. These homes must go through processor after processor and checklist after checklist before they even talk about closing the home. If you’re in a hurry, don’t bother. These homes can take up to 90 days to close, if not longer.
  4. Make sure you know the value. Have your experienced agent pull comps and breakdown the numbers for you. Look at the value of the homes around it, take into consideration if the home needs an work to be done, and figure out what type of return you’re really getting. At times, you might just be getting a cheaper home. 
  5. Remember, these homes are sold “as-is”. If you did your research in Tip 4, you’ll know how much work you will need to put into the home, and you need to know that the seller (aka bank or government) will not be doing any of it. Also remember that some lenders might not loan you the money if the home needs too much work. This depends on the type of loan you’re getting of course, but make sure they will be okay loaning you money on the home with the state it is in.

The Elizabeth Monarch Group has worked with several foreclosure homes, representing  both buyer and seller transactions. Contact us if you have any questions regarding the purchase of a foreclosed home!

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