Tips for Buying Foreclosures

Many Macomb County home buyers and Oakland County home buyers look for the best deal and lowest price possible when shopping for homes for sale.  Some home buyers even consider buying foreclosed homes owned by banks.  Bank owned foreclosures are typically more expensive than other types of foreclosure purchases, such as pre-foreclosure and auction homes.

Buying any home is a big decision and requires much thought and consideration – the same goes for buying a foreclosure home.   The real estate professionals at Ben Lang Properties as always would like to inform Macomb County and Oakland County home buyers that there are many things potential home buyers should know before investing in a foreclosed home.

Many Oakland County and Macomb County home buyers now begin their home search with a request to look at foreclosures and bank-owned properties.  But one thing many home buyers do not know is, there’s no guarantee that buying a foreclosure property will save money compared with buying the traditional way.  Before any Metro Detroit home buyer begins searching for homes to buy – Ben Lang Properties suggests a home buyer consider the following tips for buying foreclosures first!

1. Identify the reason for purchasing a foreclosed property

Do you intend to occupy the property?  Do you plan to flip (resell) the property with or without repairs?  Do you plan to rent the property?

Each of these questions presents different cost requirements and a different strategic plan.  One thing to keep in mind when purchasing a foreclosed property is the previous homeowner may not have had money for regular maintenance or may have damaged the house, so typically a potential buyer needs to have enough cash on hand to pay for any repairs or replacements.

2. Choose a real estate professional who is experienced with foreclosure properties

Most Oakland County home buyers and Macomb County home buyers tend to work with a buyer’s agent when purchasing REO homes (bank owned properties).  These Realtors can help a home buyer work out disclosure agreements, fees, preapproval letters, and negotiations.

It is important for home buyers to interview real estate agents and ask for statistics, have a discussion about the Realtor’s business practices, previous real estate transactions, and personal references.  A home buyer’s real estate agent can locate foreclosure properties and establish their market value — which could be very different from the asking price.

3. Establish the foreclosure properties market value

A Realtor prepared Comparative Market Analysis is often the best bet to determine real market value.  Ask for a report that contains information on:

• Recently sold properties similar to the one you are considering
• Properties on the local real estate market currently (with notes about property history and days on market)
• Properties under contract (with notes about property history)
• Properties that were withdrawn from the market or expired (with notes about property history)

4. Plan a property inspection

Utilities are usually shut off when a foreclosure property goes on the market.  Banks may arrange for utility turn-on for a two or three day period after the property goes under contract.  Sometimes home buyers must pay for re-winterizing the property, this is something to discuss with your Realtor.

5. Calculate repair costs.

Many foreclosures are in a state of disrepair ranging from mild cosmetics to major rehab candidates.  How much of the work will you do yourself following settlement?  Get multiple estimates of cost to restore the property to habitable or saleable condition.  The buyer is usually financially responsible for all repairs on REO homes.

6. Patience pays

When you buy a foreclosed property from a bank, many people are involved, so home buyers need patience.  Offers made on REO homes typically go through a longer process than other types of home sales and delays are inevitable.  The bank usually makes counteroffers, so be prepared!  Again, if a home buyer hires a real estate professional that is experienced with foreclosure transactions many of these steps will be taken care of by them.

For more information on your local real estate market, purchasing foreclosure homes, or if you are a first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Macomb County and Oakland County Realtor, complete Ben Lang Properties contact form to have a real estate agent contact you!

Ben Lang Properties specialize in selling Oakland County Real Estate.  Troy Realtor selling Metro Detroit real estate, working with Keller Williams Realty in Troy Michigan.  See what past clients have to say about Ben Lang.  Working with short sales and foreclosures in this challenging real estate market to get the best deals for home buyers.

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This entry was posted on Thursday, January 13th, 2011 at 12:19 pm and is filed under First Time Home Buyer, Foreclosure, Home Buyer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.