Do I need cash or preapproval to buy a foreclosure?

Yes, most lenders require buyers to have cash on hand or a pre-authorized loan before submitting an offer on a foreclosure.

Is there room for price negotiation when buying a foreclosure?

Usually not; the minimum price is typically fixed and negotiation is rare, especially at property auctions.

Should I get a property inspection for a foreclosed home?

Absolutely, it’s advised to pay for a third-party inspection since foreclosed homes are sold as-is and may have hidden issues.

What does “as-is” condition mean in foreclosure purchases?

It means the property is sold in its current state, with no repairs or guarantees, so buyers should be prepared for potential defects.

Why is it important to work with an experienced realtor when buying foreclosures?

Because navigating foreclosure purchases is complex, an experienced realtor can help manage the process and avoid costly mistakes.

Buying a Foreclosure: 5 Key Tips for Smart Homebuyers

Buying a property out of foreclosure can be a very smart move, financially. But it can also be complicated, expensive, and stressful.

Here are five things to keep in mind before you take a first step to buy a foreclosure:

Cash Or Preapproval Required

Buying a house that has been returned to the lender through foreclosure means dealing with bureaucracy rather than with a motivated seller. Large lenders are notorious for taking their time to approve a contract, even if the offer is for the exact amount specified. Then there is the paperwork, which can seem endless. Most lenders require that prospective buyers have cash on hand, or a pre-authorized loan in place to even submit an offer.

There's Little Room for Negotiation

Although in certain circumstances there may be an opportunity for discussion about the price, that is not the norm in a foreclosure. The minimum price is usually written in stone, even during an on-site property auction, and the only direction is up! The days of buying foreclosures for a song are long past, if indeed they ever really existed.

As-Is Condition Means Just That

Some buyers specialize in foreclosures while other investors run in the other direction. There are pros and cons, of course, to every transaction. Some advice is to always pay the fee for a property inspection on a foreclosed property, even if you have experience. A third-party evaluation is especially valuable if the home has been vacant for an extended period, if the utilities have been turned off, or if there are extensive visible defects.

Foreclosures can be like icebergs: What you see may be nothing compared to what lies below the surface. Also, with the findings in writing, always confirm that your loan commitment and insurance quotes will be honored despite the existing condition.

The Need for an Experienced Realtor

Navigating the landscape of property foreclosures is a specialty field, and caution is the name of the game. As a prospective buyer of a pre-foreclosure, a short-sale or a foreclosed home, an experienced realtor is your best resource. A real estate professional will help you deal with all timelines and requirements, and has the knowledge and expertise to recommend lenders, inspectors, insurance agents and contractors to help you decide.

Always Consider Future Value

Although the initial price might be right, there are additional variables at play in every real estate transaction.

What can you expect in terms of appreciation over the short term? What is the long-term outlook for the neighborhood? Will the repairs and improvements needed add to the home's value, or simply bring its condition up to standard? Do you plan to live in the home, or is it strictly for resale?

Contact a trusted mortgage advisor at Bond Street to get your pre-approval today!