For buyers interested in scoring a deal on a property in Volusia County, foreclosed homes can offer an excellent opportunity to save some money. In most cases, lenders are eager to unload the property as quickly as reasonably possible and will frequently offer discounts to buyers to get rid of the property and move on. But the process of actually purchasing a foreclosed home is often different than buying a non-distressed property. Here are seven things to consider before deciding to purchase a foreclosure.
Get pre-approved for a mortgage
1Many of the main players in the residential mortgage market, such as Fannie Mae, require a purchase and sale agreement to be submitted with a pre-approval letter from a bank or mortgage company. If you are planning to purchase a foreclosed property, having financing in place before you begin looking is pretty much a requirement. You should also know that most banks will also reject all contact contingencies. Closings can be quick with a foreclosure, so make sure to have any needed cash ready before getting serious about a distressed property.
Know what you are getting in to
2Know the city and/or neighborhood where you want to buy a foreclosure home. If you have children, make sure you are educated about the schools in the area (each listing on our website contains neighborhood school information and reviews). Maybe you work from home and depend on broadband internet (see our links page for links to local utilities).
Target specific areas to avoid being overwhelmed by new property listings. Feel free to sign up to receive free email alerts about new listings in Volusia County and across Central Florida that meet your search criteria, such as home size, cost, location, etc.
Learn the lingo
3If you choose to work with David to find the right foreclosure home in Volusia County you can count on him to guide you through the process, but it’s still a good idea do some work up front to become familiar with the basics of how the process usually plays out. Learning the ins-and-outs of the process will lend credibility to your offer and show others that you’re serious about this endeavor. Basic know-how may give you the edge while bargaining, which could lead to a lower purchase price, more favorable terms, etc.
Don’t assume they will just accept any offer
4While foreclosures can often present a real bargain for a home buyer, chances are better than not that a lender won’t accept what they believe to be a low-ball offer. Even in markets with high numbers of foreclosures, such as Deltona, lenders may prefer to “wait it out” until housing prices bounce back as opposed to taking a loss on their investment.
Tip: Use our advanced search feature to find distressed homes in Volusia County that have recently sold. This can give you a good starting place when trying to decide what to offer.
Don’t limit yourself to foreclosures
5Even if you are going into your search with the intention of buying a distressed home, don’t make the assumption that those are the only deals on the market. While there are usually plenty of competitively priced foreclosures on the market, there are many other reasons that a seller may be offering a deal on their home. Perhaps they have a job offer in another state and have to move no matter what, or maybe they have had problems making their mortgage payments and have had a short sale approved by their mortgage company.
Also, many times foreclosures come with unavoidable baggage. There may be unforeseen liens against the property or major repairs that need to be done. Also, if you limit your search to foreclosed properties you may not find properties in your desired neighborhood or with the features you need.
Don’t rule anything out. Always keep in mind that your end goal is to buy the best house for the money.
Get a home inspection
6You may think you have found the perfect home at a great price but what’s happening inside the walls and under the floors? What good is saving a few thousand dollars on a home purchase if you end up spending that much or more on unexpected repairs?
A 2011 poll conducted by the American Society of Home Inspectors found that approximately 3/4 of U.S. homeowners agree that a home inspection helped them avoid potential costly repairs; 64 percent reported that their home inspection saved them money.
Plan for the future
7Many people who buy foreclosures and other distressed properties do so with the intention of flipping the house quickly and moving on, but what if the home’s value continues to decline after the purchase or the market dips and you aren’t able to quickly resell it? Are you prepared to deal with it for the long haul? What will the property cost if you have to hold on to it for a few years? Can you rent it out to begin recouping your investment? Run the numbers ahead of time to avoid unforeseen financial complications in the future.