Although the national trend seen in the past year was going down, there are specific areas throughout the country where foreclosures were increasing. For example, from 2016 to 2017, Washington D.C. experienced a 60 percent increase in foreclosures from the previous year according to “A Look at the 2017 Foreclosure Market and the Future in 2018.” Purchasing a foreclosed property can be an opportunity for some as long as they know what exactly they are getting into and how to shop for one.
Buy A Home That Is Owned by A Bank
The lowest priced homes you will notice will be sold at auction. This runs a risk for people looking for a bargain because you don’t have the benefit inspecting the home to see what you are getting into. The home could very well need thousands of dollars of repairs to make it livable once again. Furthermore, the foreclosed property may have “liens for outstanding tax payments,” according to “Is Buying A Foreclosed Home Ever A Good Idea?” This could mean you will have to deal with the IRS to settle what is owed.
The other safer option that is available to you is to purchase a foreclosed home from a bank. These properties are known as real-estate owned homes, or REO, and the banks have taken over ownership. They tend to sell these kinds of properties below market value and they are responsible for paying off any liens against the pretty. But the real benefit for the buyer is arguably the most important—the ability to hire a home inspector. Rather than not knowing what you are getting into, you can have a home inspector take a look at the home to determine what sort of repairs that you should expect to make if you buy it.
Other Things to Improve the Bargain
If you intend to purchase a foreclosed home, then you should see if you can do it using cash. According to “7 steps to a great foreclosure buy,” many lenders these days are favoring cash purchases. More often than not, they will take a cash deal over someone that requires financing. You can use this as a bargaining chip to get a better price.
Coupled with a cash purchase, you can attempt to negotiate a lower price if you make try to purchase the property at the end of the year. Most banks would rather have the deal off the books than keep it into the following year. If you can come forward with enough cash to buy, and make it clear you can close by the last day of the year, you will have put yourself in a great bargaining position.
If you do find a property that seems like a steal, don’t forget to analyze the neighborhood it is in, what sort of amenities are in the area around it, and how the school district is rated. All of these things should be considered because this will help you determine if the home will be able to hold its value in the long run.