Buying a foreclosure property can be rewarding but comes with significant risks. Here are the steps to the process and potential pitfalls to be aware of.
1.) Evaluation - Your REALTOR can help you determine the fair market value for the property, so you know what it's actually worth. The valuation should be discounted compared to similar properties because the foreclosure property is sold AS IS WHERE IS and the condition of the home is not guaranteed at the time of possession. Be aware of the risk!
2.) Negotiation - When you write an offer to purchase a foreclosure property, you are negotiating against a lender and/or their lawyer, not a homeowner. Your negotiating strategy should reflect this. A skilled negotiator can assist in crafting a tailored strategy to achieve your desired outcome.
3.) Due diligence - The lender did not occupy the property and will not make any representations or guarantees about the property. You will want to have a thorough home inspection by a licensed inspector. A good real estate agent will also help with the detective work to determine the property's history and any pertinent information.
4.) Court Approval - If your offer is accepted and you remove your conditions, your offer will go before the courts for approval. You are not required to attend the courtroom proceedings however it is advisable if you would like to amend your offer should any competing offers arise on the court date.
Buying a foreclosure property is a highly complex transaction that differs significantly from a traditional home purchase. Ensure that you have an expert on your side!