How to Buy a Foreclosed Home

The real estate meltdown has an abundance of foreclosed homes on the market. As a realtor I have personally sold about 300 foreclosed homes in my career. This may be the time when banks are ready to give the best deals before the market changes and values go back up. Buying a foreclosed home is similar in some ways to buying a normal market home but is also very different in many aspects. One you are dealing with a bank so the process is strictly business to them. There have a target figure in mind based on Realtors doing what is called a BPO or Brokers Price Opinion. Usually the bank will have the listing agent do one as well as a non-listing agent. The asking price is based on these BPO's as well as what the bank has paid for the property at the foreclosure sale.

Generally banks will drop the asking price on a property about every 30 days until it sells or hits bottom. If you can find out how long it has been on the market you may be able to time an offer just after a price drop. I usually see a drop of about $3000-$5000 per month on an average priced home of of $75000 to $100,000.

Remember these homes will be sold "as is". You get what you get, no repairs will be made prior to closing with possible exception of termite treatment if needed or a leaking roof. Therefor you need to thoroughly inspect the home or hire an inspector. You usually will have a short period to inspect and opt out of the contract if the property is not suitable to you. Always get a termite inspection. Many the homes have had damage done to them and items removed like heat pumps, appliances, sinks etc. Make sure what you need is still there and working.

The selling bank will clear the title for you and many times will provide title insurance. Bear in mind there may be some understandable ill feelings between the bank and the people who lost the home so keep it locked and under watch up to and after closing to lessen vandalism from previous owners or others.

When you offer try to make a reasonable offer based on the condition and asking price. Banks really only care about the bottom line. Get in the neighborhood of an acceptable offer and they will work with you. Make a terrible low ball offer and you may not even get a reply as they do not have to reply to any offer. Sometimes there will be more than one offer and you may be asked to do your highest and best offer while acknowledging in writing that there is more than one offer active.

Onec closed try to take command of the property right away to keep vandals away. Clean it up, mow the yard and leave some lights on at night until you are able to occupy it or get it rented if that is the plan.

 I am a Realtor and have personally sold over 300 foreclosed homes for FreddieMac, HomeQ, CitiFinancial and others. if you have questions let me know and I will do the best i can to answer them.

Mortgage rate are now in low 5% range and may yet go to upper 4%. This a great time to buy any property and with the super deals banks are giving on foreclosed properties you could not ask for a better time to buy.