10 Tips for Buying A Foreclosure in the Frederick Real Estate Market

Monday, August 23, 2010

In many neighborhoods, Foreclosures and Short Sales make up 30% of the market. We have a listing in a neighborhood where 70% of the homes on the market are foreclosures or short sales. No question, there are some great deals to be had. But when is it a good deal versus a bad deal?

There are definite risks associated with foreclosures most buyers are aware of, like the repairs that often come with neglected and abused homes. 

If you plan on purchasing a Bank-owned property, Here are some tips I’ve put together from many different sources, to help you mitigate against the risks as much as possible.

1. Just like any home purchase, prioritize your needs. Find a house that meets most or all of your needs, don’t compromise on things you know you’ll want and need, just because it looks like a great deal. You still have to live in it, it has to work for you.

2. Talk to the experts. Get a real estate agent who has foreclosure experience. It's best to get a referral from someone you trust. The same for getting a lender.

3. Look at neighborhood Data. Find out the trends for that neighborhood. Find out recent sales, 3 months is adequate.

4. Contact the local police to see if there is a history for the house, and the neighborhood. I’ve been reading about a case where the foreclosed house was previously a meth lab. The would-be buyer had haz-mat do tests on the house, and decided against buying. It was in an expensive neighborhood, so don’t let preconceived notions stop you from searching out the history.

5. Do your homework. If you think you might like to buy it, get estimates on the work that will need to be done. If you’re handy, and think you can do the work yourself, add the cost of paying yourself into the mix. I know plenty of people who started out with the best of intentions, but either got tired, or got too tied up with daily life to finish.

6. Check out Rehab Loans with your lender. You may be able to finance the work you will need to do. You’ll need those estimates from at least 3 contractors.  The FHA 203 is a good program.

7. Make sure your offer is contingent on a home inspection. Mold, termites, and anything else you uncover in the home inspection will help you know how much repair work you'll need to count on. It’s well worth the $400 to $500.

8. Buy at the right time. Public Auction is a good time. Generally, the best deals are after the home has been on the market 60 days or more.

9. Don’t eliminate the rest of the homes on the market. There are some great deals out there that you don’t want to miss because they aren’t bank-owned or distressed sales. Add up the cost of making the foreclosed house desirable to you, and weigh it against some of the deals out there.

10. Make sure you have the patience to wait for the right deal, the will and drive to repair and make the house livable, and enough money to finish the job.

Read more about Distressed properties at All Things Frederick.
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The Highland Group 
Chris & Karen Highland
* 301-831-9947
Turning Point Real Estate
isell4u2@msn.com
Text Us: 301-401-5119