Considering Buying a Foreclosed Home? Avoid these Mistakes
Posted July 20, 2014

Foreclosure filings increased significantly as a result of the housing bust that occurred several years back. Although unfortunate for those who lost their homes, purchasing a foreclosure turned into a once in a lifetime opportunity for those who could invest in real estate. Following are some of the pitfalls or costly mistakes that buyers can run into while attempting to purchase foreclosed property.

Buying without an agent. Purchasing foreclosed real estate is more complicated that buying a traditional home. Because of the complexity, it requires a real estate agent that has a background in buying and selling foreclosed homes. Unless the buyer is a real estate expert themselves, it is strongly advised that they use an agent with this type of expertise.

Unfamiliarity with the law. Foreclosures are heavily regulates, and those laws can change significantly from state to state. Because of this, consumers should first review the foreclosure laws in their state then request qualified legal advice from a local real estate attorney.

Thinking short-term instead of long-term. If you are trying to invest in a quick house flip, you will most likely lose money. This is because many foreclosed homes could decline further in value in the months after the sale. One type of investor likely to fare well would be the one with the resources and patience for a long-term real estate investment. The buyer who can afford a fully amortized fixed-rate mortgage would also be likely to do well.

Considering only the selling price. The price that a foreclosure is listed for could be well below what it was valued at in the past. The reason for this would most likely be the amount of maintenance or repairs that would be required to make it livable. A possible buyer should set aside approximately ten percent of its price tag just for repairs. Homes can deteriorate fast.

Searching for foreclosures in too broad an area. The best target market a buyer should concentrate on should be in a specific neighborhood, and using an agent with experience in that area. Let the agent know just what you are looking for in the way of property, bank listings, cost willing to pay and your desire to be alerted when they come on the market. That way you know when your specific wants in a foreclosure becomes available.

Assuming the bank will take any offer. Banks usually outsource their foreclosures to real estate agents. That agent's priority is to get their client a good price and sell the property quickly. A lot of people think that that because the property is bank-owned, that they will let it go at a ridiculously low price. Making this type offer may derail any type of negotiations right away. Make sure you talk through this process with your agent.

Posted By: Michelle Keaton-Barrow
July 20, 2014 06:59 PM

Previous Blog Entries

Time for Spring Yard Maintenance Mar 23, 15
Shortcuts to Make Your Home Life a Little Easier Feb 18, 15
Selling an Older Home? Have it Inspected to Avoid Surprises Feb 02, 15
Making Practical Home Renovations Jan 18, 15
Winter Home Sales and Curb Appeal Jan 04, 15
Mortgage Rates and 2015 Dec 22, 14
Hints for Holiday Spending Survival Dec 08, 14
Best Home Renovations to Increase Property Value Nov 23, 14
House Hunting During the Holidays Nov 09, 14
Home Fix up Projects - When Not to Do It Yourself Oct 26, 14
Get The Best Mortgage Rate Oct 12, 14
Planning to Buy a Home? Give Yourself an Advantage Sep 29, 14
Multigenerational Living Sep 21, 14
Coming Soon! 2014 Wake County Parade of Homes Sep 14, 14
Prepare Your Homes Outside For Fall Sep 07, 14
Home Loan Application Documents Aug 31, 14
Paying for Your Home Improvement Project Aug 24, 14
Owning Rental Property - Is it for you? Aug 17, 14
Take Advantage of the Best Buys of Summer Aug 10, 14
The Economy's Influence on Determining Your Mortgage Amount Aug 03, 14
Compare Bi-weekly Mortgage Payments to Monthly Payments Jul 23, 14
>> Considering Buying a Foreclosed Home? Avoid these Mistakes Jul 20, 14
Treat Yourself to Something Special - Take a Staycation Jul 16, 14
Passive Solar Home Design - Is It For You? Jul 13, 14
Moving? Don't Forget About These Items Jul 09, 14
Listen to Your Home When it Signals Something is Wrong Jul 06, 14
A Money Saving List for the Homebuyer Jul 02, 14
Millennials - Our Newest Generation of Homebuyers Jun 29, 14
Stay Cool & Save Money Jun 25, 14
How to Dispose of Household Items, Large and Small Jun 22, 14
VA Home Loans - Great Benefits for Deserving Veterans Jun 18, 14
Add Character to Even the Smallest Bedroom Jun 15, 14
What is a Short Sale? Jun 11, 14
Showing Your Home While Still Living There Jun 08, 14
Furniture Shopping for the Frugal Jun 05, 14
Mortgage Refinancing Mistakes to Avoid Jun 01, 14
Summer Is Coming - Stay Cooler for Less May 28, 14
Home Renovations That May Not Add Value May 25, 14
Get Maximum Value from Your Home Appraisal May 21, 14
Home Loan Denial - How to Come Back Strong May 18, 14
Selling Your House - What You Should Disclose to Buyers May 14, 14
The Importance of School Districts to Homebuyers May 11, 14
Plants You Can't Kill (Really!) May 07, 14
Empty Nesters - It's Your Time May 04, 14
Home Buying Tips for the Growing Family Apr 30, 14
Tips for First Time Home Buyers Apr 27, 14
Rebuilding Your Credit Score Apr 23, 14
Spring Cleaning Tips for Sellers Apr 20, 14
Setting Up Your New Home on a Tight Budget Apr 16, 14
Know How Much House You Can Afford Apr 13, 14
Save Energy & Money on Your Homes Power Usage Apr 09, 14
Future Home Buyers - Down Payment Options Apr 06, 14
Listing Photos - Your Homes First Impression Apr 02, 14
House Hunting - How Men and Women Differ Mar 30, 14
Pros and Cons of HOA (Homeowners Association) Mar 26, 14
Tax Benefits of Home Ownership Mar 23, 14
Make Your Moving Day Easier Mar 19, 14
Selling Your House - Reasons Why You Should Use a Realtor Mar 16, 14
Maximizing Your Homes Curb Appeal Mar 12, 14
Getting Maximum Value from Your Home Purchase - The Five Year Rule Mar 09, 14
First Pre-Qualified, then Pre-Approved - Starting the Loan Process Mar 05, 14
Defining and Improving Your FICO Score Mar 02, 14
Purchasing a Home - Making Your Credit Work for You Feb 26, 14
Open Houses - Finding Your Home Feb 23, 14
Location Matters - Finding the Right Neighborhood Feb 19, 14
New! Helping our Home Buyers to Help Themselves Feb 16, 14
Government shut down and purchasing homes Oct 06, 13
Parade of Homes in Raleigh NC Oct 06, 13
Get your own agent! Sep 15, 13
Financing programs Aug 25, 13
VA loan. Yes or no. Mar 19, 13