If my recent column about the three types of foreclosures peaked your interest in making such a purchase, read on to learn a few of the common mistakes to avoid when you’re ready to make an offer.
First, don’t get caught up in a bidding frenzy. Banks may under-price their offering, hoping to generate multiple bids and drive the selling price up over the asking price. This happens more often than you would expect.
Second, don’t ignore the comparables for similar properties in the area. If there are several foreclosures in the neighborhood, be sure that you have the latest home prices to compare against, and keep your offer at those figures.
Third, don’t underestimate your repair costs. Be sure to factor in an additional 10 to 20 percent of the purchase price for unexpected repairs.
Fourth, if you’re buying for the short-term because you may relocate or upgrade in a few years, don’t go house hunting in a neighborhood with several foreclosures. These properties may continue to decline in value, meaning you may have to sell at a loss if you have to sell the property again in the near future. Protect your investment by purchasing the only foreclosed home in a better neighborhood.
Finally, do secure loan pre-approval before you start shopping for that home, because you’ll need it to move quickly once you’ve found your ideal property. If you have to wait for a few days to get that pre-approval, the property you want to bid on may already be under contract with a buyer who was prepared with their pre-approval letter. With your agent as your field guide, your hunt should be successful!
Contact the Kathy Henne Team RE/MAX FINEST by calling (937) 778-3961.