Five Rules for Buying a Foreclosure
or Short Sale with Confidence
(ARA) - Buyers are still clamoring
for real estate deals in this turbulent market. Foreclosures and short sales
offer some of the best bargains, but also have a higher risk level. Still, more
than four in five adults think foreclosures and short sales can be good deals,
according to a recent American Society of Home Inspectors (ASHI) survey.
Some analysts say the rebound has
begun and home prices may rise by the end of 2012. This means now may be
buyers' last chance to take advantage of affordable properties and low interest
rates. If you want to score a bargain before the housing market recovers,
you'll need to follow a few rules to invest with certainty.
Make a wise investment by adhering
to these five rules while shopping distressed properties:
Rule 1: Position yourself for
Before starting your search, get
preapproved for a mortgage so when a good deal presents itself, you're
positioned to submit a bid right away to be the first offer on the bank's desk.
Work with an experienced real estate agent who can help guide you through the
daunting sea of foreclosures and short sales. Bidding can be complicated and
time-consuming, especially when working with a home sale needing bank approval.
A good agent will know how to navigate through the paperwork and red tape.
Rule 2: Do your research
A real estate agent can help you
with research, but it's wise to do some on your own. Are there any undisclosed
liens on the property? Is the seller behind on his property taxes? What permit
records does the city have on file? This information will be critical during
decision-making. Work with your agent to ensure the contract requires any
delinquent taxes, liens or assessments will be paid prior to you taking
ownership of the property.
Rule 3: Always get a home inspection
Eighty-four percent of adults
surveyed by ASHI said they would be more likely to purchase a distressed
property after a home inspection has determined its condition.
A home inspection gives you the
confidence to move forward with your purchase because you'll have as much
knowledge as possible about the condition of the property. An inspector will
visually examine the condition of the home's roof, attic and insulation,
foundation, basement and structural components, as well as interior plumbing
and electrical systems. Be sure to find an ASHI-Certified Inspector (ACI) to
ensure your inspector is experienced, as many states have minimal licensing
requirements. To find a local ACI, use ASHI's "Find an Inspector"
tool on www.ASHI.org.
Rule 4: Budget for repairs
When looking at short sales and
foreclosures, remember price is only one aspect to consider. A home will almost
always require some type of repair. After receiving your inspection report, you
can estimate costs associated with necessary repairs, maintenance or
Rule 5: Assess the neighborhood
Location should be a top
consideration when purchasing real estate, and in a tough housing market, it's
even more important. A home has limited worth if it's located in a less
desirable neighborhood. High foreclosure rates can turn a once-desirable
neighborhood into one many might likely avoid. These locations are likely to
see a slower recovery than more populated or favorable areas less affected by
the economy. Make location as important as price when making a purchase
Protect yourself with knowledge and
expert advice to make a confident, smart decision about your largest