Sometimes buying a house can be tough due to money limitations. If your budget is preventing you from finding your home, a great option is to try buying a foreclosure. Foreclosures are usually available for a fraction of the typical market value and the purchasing process isn’t too different from buying a regular home. In addition, the banks are usually in a rush to sell the house because the longer the foreclosure is on the market, the more money they lose. This gives potential buyers more power when it comes to negotiating a good price. Unfortunately buying a foreclosed home can prove to be a challenge if you’re not a real estate investor. Here are a few things you should know before purchasing a foreclosed home.

Things To Know

Working with a real estate agent who is experienced or has expertise with foreclosures is probably your best bet when it comes to purchasing one. There are plenty of risks that can come with buying a foreclosed home and having a real estate agent who is educated in foreclosures can save you a lot of time and headaches. 

What You Need

It’s important to acquire a letter of pre-approval when you go to the bank to try and get a home loan. A letter of pre-approval shows that you’re serious about buying the home regardless of the foreclosure, and usually includes information detailing how much money you’ve been approved to borrow as well as what kind of loan and interest you’re eligible for. Of course, pre-approval is not a guaranteed way to secure a home loan. If your financial situation were to change or if mortgage rates change, that can play a role in the decision as well.

Risks

A ton of risk tends to come with buying a foreclosed home, such as the need for repairs or perhaps an infestation of some sort. This can make you spend more money than you wanted to, sometimes even rendering the deal you got for buying a foreclosed home irrelevant. It’s important to hire a home inspector to give the property a look, as they can tell you exactly what you want to get repaired before living in the house as well as how much it will likely set you back. Once they let you know what kind of repairs you need, that will give you a better idea of if buying the home is worth it. It’s also important to remember that you can only get a home inspection before making the purchase if the foreclosure is being sold by the bank. Buying a foreclosure from an auction means you cannot see the interior of the home until after the purchase has been made, which can end poorly if you’re not prepared for the worst.

While buying a foreclosed home can be daunting, there are plenty of resources out there to ensure you don’t make a poor decision. Contact your local realty offices and see if they have someone who specialized in foreclosures.