Hi, I’m Nancy Rooney, a REALTOR at Red Barn Realty of Vermont. Are you thinking of buying a foreclosure? I have listed quite a few foreclosures and have represented a number of buyers when purchasing a foreclosure. When you hear foreclosure, you may think DEAL! While you can get a tremendous deal on some, there are some you want to run from very fast! I thought I would try to give you some insight on what to expect when purchasing a foreclosure.
First of all, when dealing with a mortgage company/bank, understand that this is not your typical seller. Most lenders will not do repairs to any foreclosure they have as they are trying to get as close as possible in price to what is owed on the property. They are looking out for THEIR bottom line. So usually, what you see, is what you get. When you are at the property for the showing, list what big ticket items are needed. Example: is it going to need foundation work, does the electrical look bad? This could play into any offer you might want to make.
Financing a Foreclosure
Is this going to be a cash offer or do you need to finance?
Banks are big on how they get their money. If it is cash, be prepared to share your bank statements with them. They want to make sure that you have the cash to complete the sale. My recommendation is that if you have any intention of purchasing a foreclosure with cash, open a separate checking account and put a little more money in it than what you think will be needed to close. That way, you aren’t sharing all your personal finances with them.
If you are going to finance the purchase, have your financing in place. Get your pre-approval before looking at a property. Don’t even think about making an offer without it as that is the first thing a bank looks for when an offer is submitted. Without it, they won’t even consider your offer, no matter how good it is.
This ends the first installment on foreclosures. Stayed tuned for installment 2.