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How to Buy a Foreclosed Home

Posted: Monday, July 19, 2010

by TeamAfro
AfroDaddy.com

The Basics:

Everybody knows that the economy is going through turmoil, and nowhere is that more evident than in the real estate market. With so many people losing their homes thorugh foreclosure you may be wondering "am I next". But what about the other side of the coin. One man's loss is another man's gain so what about buying a home that someone has lost? According to Bob Robinson of ATM Real Estate you may be able to get that house at a discount of up to 40%. "The thing that most people don't realize is that you want to buy a foreclosed home, not a home that's in foreclosure". Bob adds, "A home that is in foreclosure is still owned by the mortgage holder. There may be many problems with the home and the title. A foreclosed home is one that has already been taken over by the bank. There is where you will find the greatest discount".

Although the bank is the owner of the foreclosed home, it is not advisable to buy a home directly from them via a trustee sale. Many times it is hard to tell what you are getting (leaky roof, bad plumbing, etc.). The better approach is to buy the foreclosed home through a trusted real estate agent who has inspected the property and knows the problems (if any). Your real estate agent is your advocate, working for you to make sure you pay the right price and know all the issues before you make the purchase.

What You May Not Know:

You may still qualify for first time homebuyer credits if you bought your house and then sold it and are now buying another home.
The down payment for a home puchased with an FHA loan still only requires 3% to 3.5% down.

What You Need To Know:

When buying a foreclosed home you want to buy a home with "built-in profit", meaning that the home is worth more than what you pay for it. A good real estate agent will direct you to these types of properties.
Before you buy any home, make sure you know the reason you are buying it: for profit, for shelter for you and your family, or to fix it up and sell it.
Before you buy, make sure you know the total cost you will have to pay to get in the home: down payment, taxes, fees, expenses, and/or any repairs. If you know what the costs are going in you have a much better chance of buying a property you can afford.
When purchasing a any home (foreclosed or otherwise) you should look for someone who has "been there and done that". Always use an experienced real estate professional who has done what you are trying to do whether it is buying a home for profit, a fixer upper or a home for your family.
Even in this tough economy people are still bidding on homes. If someone is selling a home at a significantly discounted price you should expect that there may be multiple bidders on that home, which will drive the price up. Make sure you stay within your budget and don't get caught up in a bidding war.

Team Afro is the writing team for AfroDaddy.com - The Black Man's Survival Guide. The website is http://www.afrodaddy.com and you can reach the author of this article at teamafro@afrodaddy.com

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