SvetLana Cole - Full Time Licensed broker with "Charles Rutenberg Realty"

3135 Book Rd, Naperville, IL 60564

“Equal Housing Opportunity”

Cell 630-447-8382

Tips buying foreclosure homes

These tips on buying foreclosures will save you Money,  Time and a lot of Aggravation.

1. Get a free list of foreclosure homes to choose from.

You can do that by logging onto the HUD website and doing a search for your state, town or zip code on your own. Or you can just ask a Realtor to send you a list of foreclosures and bank owned properties in your town or other towns that you are interested in.

Note: The information you get from public websites like HUD, Realtor.com etc are not always accurate and updated.

I had my clients calling me and requesting more information on homes they found on other websites and when I checked those properties, I found that the listings were sold months ago, or the price was not correct, etc.

2. Have your cash ready or get your pre-approval letter.

"Money make more money" The best opportunities are for the buyers with cash. Your cash is the best pre-approval letter for the Banks. The contracts with cash and no contingencies get approved faster and easier.

Banks love cash!

But it does not mean that you can buy property cheaper. Maybe a bit faster.

There are a lot of foreclosure home listings that state right in the description "cash only".

The reason that banks request cash only is that they know that those homes will not be qualified for a loan. They might be missing a furnace, water heater, have broken plumbing, peeling paint, leaking roof or basement, etc.

Banks will not give you any kind of disclosures,"AS IS" is all you get.

But do not worry, loans work too.

Choose your lender, whom you trust and like to work with and get pre-approved.

I know which lender is right for each situation. I am often asked to refer a lender or a lawyer or other professionals. The higher your credit score is the lower your mortgage rate will be.

The best way to buy a great value home, using a loan, is to buy short sale - pre-foreclosure home.

Short sale homes usually come with disclosures and most of the time they pass approval for a loan.

Short sale properties are generally in way better condition than bank owned foreclosures (REO - Real Estate Owned). People still live in short sale homes, so there are no broken pipes or missing furnace etc.

Conditions vary.

If you apply for FHA financing to buy a foreclosure home, do not expect a fast purchase.

Bank owned foreclosure homes commonly are not in very good condition, and will only qualify for FHA financing using a 203K program loan, which lets you borrow extra money for repairs.

If the bank owned home is a good deal, at a low price, then there will likely be other bidders, and your offer is not as likely to be accepted.

If you are the only bidder, then there is a good chance the bank will wait while you go through the 203(k) process.

(This seems ironic, since the banks are so slow to process any offer in the short-sale situation, but they are so impatient to sell the house when it is bank owned.)

3. Be prepared to do a lot of fixing up.

A lot !!! I really mean it! And not just light wall painting. But work on major things will need to be done.

The price of a foreclosure home reflects it's condition. The lower the price -- the worse the condition. Believe me - I see a lot of them!

So if you are handy, good for you! I have dealt with a lot of home repair people in a lot of different situations.

Looking for a great deal on a home with minimum fix ups? Buy a short sale.

4. Turn on your imagination. You will need to be able to see what this property could look like once it is fixed.

Your imagination is essential at this point. You will need to see past those smashed walls, missing doors, dirty carpets, broken pipes, outdated appliances (if there are any) and be able to picture beauty and harmony of your future home.

The smell of a cat pee -- is the smell of money. The smell of cat piee chases away a lot of buyers, but it is so easy to remedy.

One thing that is not easy to remedy is small bedroom sizes, so avoid those.

Low ceilings in a basement make the basement almost worthless.

Small or missing garages are a problem, especially if there is no room for building a larger one.

5. Have the property inspected.

Banks will use every means available to hide from you any problems with the house. They want the one buyer who will buy the house and hope for the best.

It is always a good idea to know exactly what are you buying, especially when you are making "the biggest purchase" in your life.

This tip applies to a purchase of residential real estate of any kind. Even if the house looks great, we can not be sure what the "real" condition is. Especially since you get only "AS IS" condition without any kind of warranties.

Consider the inspection fee as money well spent.

6. Be prepared to accept "as is" condition.

You are getting a great deal! The most home for your money, but you will have to accept as is condition or a deal will not go through.

As-is condition is not that bad if you at least get disclosures on the condition of the house. But you will get those only if you are buying short sale home. If you are looking at bank owned foreclosures you will not only have to accept "as is" condition of the property, but you will have to sign a number of addendums (paperwork) which protect the bank from any future liability.

Here is where tip #7 comes in.

7. Have real estate lawyer's contact information ready.

Let the lawyer read the addendum before you sign it. Attorney usually will consult you on your options.

I find it a good idea to work as a team with a lawyer in the foreclosure buying process from the very start. I work with my husband, who is also a Real Estate Attorney for over 15 years, on all transactions I make. My clients find it comforting for them, knowing that they get protection.

8. Location, location, location.

Everybody knows this one! Location of your home is essential. Always keep in the back of your mind a selling thought.

When the market is down, people will not pay much for a house on a busy street, even though they paid full price for it when the market was up.

Expect a house in a bad location to drop a lot more than the same house in a better location.

9. Involve your Realtor.

I help my buyers learn whether a house is a good deal or not. I help them find houses that they would never find on their own. I help them make good use of their valuable time and money. I help to make peoples' dreams come true with their home ownership.

Realtor help and expertise is free for buyers!

Call me anytime! I will be happy to help!

Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.