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Solid Tips for Getting a Good Deal on a Foreclosure Sale

As more and more foreclosures hit the real estate market around the country, there are certainly plenty of good deals to be had. The trick for most investors or would-be investors is to learn how to separate the good deals from the money pits. For most people, the best reason to purchase a foreclosure is the amount of money to be saved off market value. While good deals foreclosure sale may abound, it is important to make sure you exercise caution to avoid finding yourself over paying or purchasing a home that will cost more to repair than you had prepared for.

One of the most important things to keep in mind about foreclosed properties is that they are almost always sold 'as is.' It is not at all uncommon for homes to fall into disrepair when their prior owners experience financial difficulties. In some instances, homeowners even damage their own homes when they realize they cannot avoid foreclosure. Still yet, there are the properties that are damaged due to vandalism when they sit vacant for long periods of time.

If you are new to purchasing foreclosed properties, one of the best ways to protect yourself is to focus on bank-owned properties or REOs. Foreclosure auctions may at first appear to offer the best deals, but you may also not realize what you're getting with a foreclosure auction until it is too late. Foreclosure auctions also typically require payments to be made in cash. This means that you will not be able to take advantage of the opportunity to obtain a mortgage loan, a process that can often take weeks. There is also the added problem of not being allowed to inspect a home you are considering purchasing in a foreclosure auction. In some cases the prior owners may actually still reside in the home. As a result, you may have no way of knowing precisely how much in repairs the home may require.

Bank-owned properties or REOs are somewhat different. In fact, they are much like a traditional home sale. Banks and lenders often list their properties with real estate agents. They will also commonly allow financed mortgages as well as home inspections. You might also be surprised to find that bank-owned properties often offer prices even lower than those found at auctions for foreclosed properties. Of course, it is important to recognize that you cannot be guaranteed of the condition of a REO property. This is why banks often significantly slash the prices on REO sales. Due to the fact that the bank does not have an emotional attachment to a property they are often more willing to negotiate.

When possible it is imperative to always have a property inspected by a professional before you consider purchasing it. This is absolutely critical due to the fact that most foreclosure properties and bank-owned properties are usually sold in as-is condition. Once you have an inspection in hand, carefully review and estimate how much the proposed repairs will cost. This can also be a good way to negotiate an even lower price on the property.

Bear in mind that properties that are selling as a short sale or a bank-owned property are now growing increasingly popular. It is not uncommon for such a property to attract several offers quickly. As a prospective buyer this means it is important for you to have your financing set up ahead of time. If you wait until the last minute, there is a good chance you will miss out. In fact, you should ideally receive pre-approval for a loan before you even begin to consider looking at properties.

Another important tip is to take the time to research your market before you make a purchase. Find out as much as you can about the local foreclosure market. Find out how much most foreclosures sell for in the local area as well as how long they stay on the market. This type of information can often be critical in helping you to obtain the best deals.

Finally, consider working with your own buyer's agent. In particular, look for an agent who has experience with foreclosures as this will provide you with the best chance of getting exactly what you're looking for and help you to navigate the process as well.

Navigating the foreclosure process can appear tricky if you are new but by doing your research, there are good deals to be had in the foreclosure market.



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