How to Buy a Forclosure
It is a fact that banks want to dispose of the property that they acquire, but that doesn’t necessarily mean they’ll give it to you without trying to make a profit. If you want to make sure that you get the best deal there is when you buy a foreclosed home it’s best to have some knowledge on the process. Here are some steps to help you make sure that you follow the right procedure the next time you buy a foreclosed home.
Buying a Foreclosure
- Do your research. The backbone of closing a good deal when it comes to foreclosed homes is being able to know everything there is about it. It’s standard procedure to publicize and file notices, so everything is open. All need to do is check with your local county sheriff and read the papers. You can also gather other information from the bank that owns the property.
- Get an appraisal and home inspection. A lot of sellers would say you should do this after the deal to avoid adding to the expenses; but it can be essential if you want to make sure that you make the right offer. A home inspection will give an idea of how much you need to get the home into better condition and the appraisal will help you find out what it is really worth.
- Do the math. You need to make sure that you get the numbers right. With the information from the bank you’ll be able to know what the bank’s break even calculation is. From this you’ll want to remove the cost for repairs, cost of the foreclosure process, liens and other expenses. This will give a rough amount of what your bid should be. Compare it to the appraisal and make sure your amount isn’t higher than the actual value.
- Make a proposal. Now that you’ve got all the information you need you can make an offer. It is common to write a letter to the bank stating your interest in the property and letting them know what you are willing to pay. You can include some of the computations you’ve made to help support your offer. You can hand this in directly or send it to the concerned department.
- Go for a quick close. Banks will usually want the process to be over quickly rather than wait a long period. Make sure that you have all the necessary documents ready. You will also want to have access to an escrow account since this is a preferred method of payment for most bank owned homes.