When scanning homes for sale, it’s easy to be enticed by homes in foreclosure — for the most part prices are lower, and there may be waived or reduced appraisal fees and closing costs. Foreclosures happen when an owner can’t make payments, and the lender takes over the home and sells it.

     While a lower price is tempting, it’s important to consider that there may be some downfalls.  Here are a few things to consider before buying a foreclosed home, and how to be successful if it’s the route you decide to take.

  • Beware Of “As Is:” Many foreclosed homes are sold “as is”– the specifics of which can vary as much as homes’ locations and floorplans. If a home falls into foreclosure and people are still living in it, they may not be keeping up with routine maintenance or major repairs. If that’s the case, an FHA 203(k) loan can finance up to $35,000 in repairs.
  • Secure Pre-Approval: Unless you are planning to come to the table with a cash offer, secure pre-approval from a mortgage lender before making an offer on a foreclosed home.  Having that pre-approval letter in-hand will show that you’re serious.
  • Consider The Comps: Take a look at other homes available in the area and their asking prices to ensure you’re making a competitive offer on the foreclosed home of interest.
  • Work With A Realtor: If you have questions, reach out to a Realtor who specializes in foreclosures. I’m always happy to help and can provide information about the pros and cons of buying a home in foreclosure (as well as what’s going on currently in the market).

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