Buying a foreclosure can be a great way to snap up a bargain on the property market. However, many budding developers make mistakes when it comes to buying this type of property. To help you with this, below are three common mistakes when buying foreclosures and how to avoid them:
Buyers Aren't Clear on What They're Buying
Typically, when you buy a property, you are able to speak to the previous owner about the condition of the structure and any possible renovations that might need to be carried out. In the vast majority of cases, the owner will tell you upfront exactly what work needs done and you are able to price your offer accordingly.
With foreclosures, the situation can become quite problematic. The property itself is managed by the lender rather than the occupant, meaning that the company dealing with the property don't necessarily have the knowledge and experience to help you through the buying process. For this reason, it's vitally important that you carry out a thorough inspection of the property to establish exactly what work is required. You may need to hire a property inspector for this – yes, this will cost you money at the outset, but it will save you major headaches down the line.
Developers Don't Look at the Neighborhood
Given enough care and attention, foreclosures can be made to look like brand new properties on the market. However, the same can't be said about neighborhoods, so it's important to look at the surrounding area before buying a foreclosure.
When it comes to buying a foreclosure, you should be careful not to buy the property on price alone. Yes, foreclosures can be great bargains, but if they are in bad neighborhoods, it will be difficult to sell or lease the home. When looking at the neighborhood, make sure you visit the area at all times of the day. Many times prospective buyers will visit during the day, only to realize that the area is entirely different at night when it's too late to change their mind.
People Assume the Buying Process Is the Same
Many people wrongly assume that the buying process for purchasing a foreclosure is the same as buying a standard property. However, this isn't the case, and it's important that you understand the differences to ensure you don't end up making a mistake that could cost you down the line.
With foreclosures, every bank has its own procedures that differ from a regular sale. In the vast majority of cases, a bank will have a partnership with a real estate agency that will market the property on behalf of the bank. Typically, these real estate agencies are purely focused on managing foreclosures, which means that they could be responsible for a large number of foreclosures at any given time. As such, you may not get the one-on-one time you would with a typical real estate agent.
To help you navigate this, it's important to seek proper legal help to ensure you get the best deal available for you. Real estate attorneys are fully qualified professionals that have experience in purchasing foreclosures, giving you the peace of mind you need to buy a new property.