Are you planning of buying your first foreclosure home?
Maybe you’ve heard about people making a living buying and selling foreclosure houses. It isn’t something you want to just jump into. There are processes and strategies that are far different than buying a regular home off the Multiple Listing Service (MLS).
This article will let tell you what you need to know about working with the banks and how to buy foreclosures in Wilmington.
What Type of Foreclosure Do You Want To Buy?
There are three stages of foreclosure, and each requires a different strategy.
Pre-foreclosure
First, there’s the pre-foreclosure phase, often associated with a “short sale.” During this period, the current homeowner still has the opportunity to sell the home themselves, often to avoid the bank taking possession.
Homeowners in pre-foreclosure are usually motivated to sell, but they need to recoup enough to pay off what they owe the lender. Because time is limited before the bank takes further action, you may find favorable deals on these properties while helping homeowners avoid severe damage to their credit.
Public auction
Second, if the home doesn’t sell in pre-foreclosure, it typically proceeds to a public auction. These auctions can take place on courthouse steps, online, or in other designated locations. Purchasing a home at auction presents both potential rewards and risks. Since the bank can only recover the outstanding loan balance, the property may be available for a fraction of its market value.
However, buying at auction is usually “as-is,” meaning there’s no opportunity for inspection, so buyers should be prepared for the possibility of extensive repairs or even outstanding liens on the property.
Bank-owned REO (Real Estate Owned)
The third type of foreclosure is a bank-owned REO (Real Estate Owned) property, which is often the most common and accessible way to purchase a foreclosed home. Once the property has reverted to the bank, they are generally eager to sell it, though it will typically be priced close to market value.
While you can still find good deals on REO homes, it’s important to factor in any potential repair and maintenance costs to ensure the overall investment remains worthwhile.
Work With A Pro
If you are in the market to buy a home for yourself or your family, and you want to find the best opportunities, you will want to work with a licensed realtor. They can help you to work with the bank, set your terms and navigate the process of purchasing foreclosed properties.
They can help you find deals as they become available, and help to steer you away from homes with potential problems.
However, at the end of the day, you are ultimately responsible for the home you buy. This is why you will want to have your own, independent inspection done if possible.
If you are looking to buy a foreclosure for a fast flip, you might want to think about partnering with a seasoned investor who can show you the ropes, or work with a company like Jonathan Swanson, Broker @ RE/MAX Essential who can help guide you throughout the entire process.
Get Your Financing In Order
Depending on the home, obtaining traditional financing might require you to jump a few additional hurdles. The banks are investing in you, and if the home appraises for a low amount, you might not be able to get the loan you’re after. Many foreclosure buyers deal in cash.
A cash offer for your home can speed up the process by avoiding additional red tape from another bank. Many foreclosure investors deal only in cash, making the process highly competitive.
Making Your Offer
Know your limits. Sure, you might pay a bit more if you are trying to buy a home you want to live in for the next 50 years. But if you are only looking to flip, you will not want to pay a dime more than you have to.
You must have predetermined price guidelines you stick to. You are better off losing a deal than losing money. The banks will often ask you to submit your “highest & best” offer.
In essence, this is the bank, asking for all interested parties to submit their maximum bid. If you’ve ever bought anything on eBay, you’ll know those last few seconds, trying to get the highest price can be invigorating and stressful!
Don’t get caught up trying to outbid what you think your competitors will offer. Stick to your price, and walk away if you have to.
At Jonathan Swanson, Broker @ RE/MAX Essential, our mission is to help you navigate the world of foreclosures and help you find a great deal.
Have questions about the foreclosure process or interested in exploring great real estate deals before they hit the market? We’re here to help!
Our team is experienced in guiding homebuyers through each step, answering any questions you may have, and providing insights to help you make informed decisions.
By filling out the quick form below, you’ll gain early access to exclusive foreclosure and pre-foreclosure opportunities, giving you a head start on finding the best deals.
If you’d prefer to speak with someone directly, don’t hesitate to call our office at (910) 538-7737. We’re ready to discuss your goals, provide support, and help you navigate your options.
