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To buy a foreclosure, be prepared for a process that can be lengthy and slow. Also, be aware that the bank doesn't have to accept your offer.
A great way to save money on a house is to buy a foreclosure. With patience, and a realtor experienced in the process, you can get a great deal on a home. But it's important to note that a foreclosed home is sold "as is" by the bank, which means you also need to set money aside for needed repairs. Most states have laws that require complete disclosure on problems with a house; make sure you ask your realtor about the house's problems.
Before considering buying a foreclosure, get pre-approved by a mortgage lender. Once you are pre-approved for a loan, look for houses that meet your requirements. Some mortgage lenders have loans that also include funds for home improvements, especially when buying a distressed property. Check the types of loans you qualify for from your mortgage lender.
Review real estate listings to look for realtors that often appear on properties in foreclosure. It's better to work with realtors that have experience in foreclosures. Besides, banks often work with specific realtors to sell bank-owned properties. The real estate advertisement might say "active short sale," an indicator that the home is in foreclosure. An active short sale also means the bank has approved the home for sale, and will take less than what is owed on the mortgage.
Hunt through real estate listings to get an idea of home prices . Make a note of how long a house takes to sell in a specific region. This will give you an idea of how long it might take to buy a foreclosed house in the region. If you have handyman skills, this can also help save money when it comes to the repairs needed when buying an "as-is" home. When you walk-through the home before making an offer, make sure that you can afford the repairs to make the home livable. There's no point to buying a foreclosure that you can't afford to fix up.
Time is on your side when it comes to buying a foreclosure. Many people don't have the patience to wait through the long process of buying a foreclosure. This helps to eliminate competition that you could be facing. Listen to your realtor's advice when making the offer to the bank.
In the end, it might take a lot of time and research to buy a foreclosure. The bank doesn't have to accept your offer the first time around or can refuse any further offers from you on the home. Work with your agent to get an idea of what type of offer the bank might take. If you plan carefully, you might even find a foreclosed home you can buy lower than your home-buying budget.