Since banks sell foreclosures “as is” and will basically NOT clean out the foreclosed properties, it is important to remember these factors when buying a foreclosure:
-They’re discounted, but not giveaways. Banks usually determine the asking price after hiring several real estate agents to give opinions on the property’s value. Banks are getting very aggressive on pricing at 10 percent to 15 percent less than non-REO properties.
-If the bank has a number (the asking price) they will hold that for awhile for about 3 to 4 weeks. After that point, they will lower the price a bit more.
-The bank will draw multiple offers. Don’t be surprised to see multiple offers.
-Many foreclosed properties don’t have much curb appeal and are not pretty. They won’t be staged and will usually need work because they are neglected.
-The foreclosed properties are sold “as is”. The foundation might be shot or the appliances might not be all there. You should make notes and include them into writing your offer. You will need to factor in fix-up money in your up-front costs.
-When the property is an REO, the bank didn’t live in the property so they cannot tell you anything about it…so you need to be aware.
-You must be pre-qualified. You must be able to qualify for a mortgage.
-Avoid certain auction: In California, every property going through foreclosure is auctioned on county courthouse steps for about the amount owed on the mortgage, plus fees. Like California Foreclosures, those auctions are all cash, don’t give you a chance to inspect or guarantee title. About 97.3 percent of properties at those properties are reverted to the lender.
-Auctions to investigate, are run by an auctioneer selling several hundred properties on behalf of the lender. Financing and inspection reports are available. These properties were listed with an agent and failed to sell.
Many foreclosures look like great bargains, but beware. Do your research.