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How to Buy Foreclosed Homes

by SMD 


We can only hope that the housing crisis ends soon. Its causing good families to lose their homes, and the houses and condos they worked so hard to buy and keep.

for-saleThe reality is, because of the current housing slump and credit crisis, many more foreclosed and could soon be foreclosed houses are being sold at steeply discounted prices. And someone is going to buy them.

If you are considering purchasing a foreclosed home there are some things that you should know. One helpful site to give you a basic guide for buying foreclosed homes is this government home buying guide.

Base Decisions on Logic, Not Emotion

One thing is a common denominator among all forms of real estate buying. If you are going to do it successfully, you have to remove all emotion from the equation. This is especially true for purchasing foreclosed homes. Make sure that your decisions are rational ones that are based upon solid information. It never makes sense to make a snap judgment on a home. Go through the normal process of analysis and make sure that the foreclosed home you’re buying is a good deal.

Evaluating the Property

When you are doing research on a foreclosed home, there are a few factors to keep in mind. Obviously, you will be taking a hard look at price, but that can’t be the end of your analysis. It is equally important to take into account the condition of the home you are observing. Some experienced home buyers might be able to assess this on their own, but for most of us, hiring an inspector is a good idea. This can become quite costly, though, so you should only hire an inspector to take a look at homes that fall on your proverbial “short list”.
One problem with many foreclosed homes is that they are in bad neighborhoods. This certainly is not true for all foreclosures, so you need to be sure of what you are buying into. Even if the home is in good condition, your property value will drop if you purchase in a neighborhood with above average property devaluing.

You should be looking for homes that don’t need a whole lot of substantial repair. Remember that the good thing about foreclosures is that you are getting an excellent price. If you need to put a lot of money into repairs, then you are practically giving back all of those savings. Unlike other types of homes, you are buying a foreclosed home just as it is. It is absolutely imperative that you uncover its actual state before making the purchase.

Stick Within Your Budget

There is another important thing to consider in addition to those, and it is something that lots of home buyers fall victim to when they purchase foreclosed homes. You must remain in a reasonable price range. Even though there are some excellent values out there, you have to remain logical about your ability to pay for these homes or else you might end up being the one foreclosed upon.

Next post, Part Two of How to Buy a Foreclosed Home we’ll get into more detail about how to go about actually buying foreclosed houses.

For Sale Signs Image by karlfrankowski

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Comments

4 Responses to “How to Buy Foreclosed Homes”

  1. InvestorBlogger on February 9th, 2008 11:04 am

    It’s going to take some brave souls to venture out in this uncertain market, but of course, with the mortgage and credit crisis worsening, that’s when the returns will be the greatest, if you have the stomach for it!

    Kenneth

  2. 12th Edition of the Carnival of Making Real Money February 10th, 2008 | Making REAL Money Blog on February 9th, 2008 11:17 am

    [...] presents a last minute addition called How to Buy Foreclosed Homes: A Quick Guide To Home Foreclosures posted at Smart Money Daily. He adds the following: “The reality is, because of the current [...]

  3. –› Carnival of Personal Finance #139: Valentine Edition on February 18th, 2009 2:09 pm

    [...] JS from Smart Money Daily tells us How to Buy Foreclosed Homes. [...]

  4. 12th Edition of the Carnival of Making Real Money February 10th, 2008 | InvestorBlogger on March 28th, 2009 9:04 pm

    [...] presents a last minute addition called How to Buy Foreclosed Homes: A Quick Guide To Home Foreclosures posted at Smart Money Daily. He adds the following: “The reality is, because of the current [...]

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