Purchasing a foreclosure can be a great deal financially, but there are things you need to know before you do.

By
Real Estate Agent with RE/MAX Results
1. Time is of the essence but...
Often the closing is delayed. Plan for this because giving yourself more time for moving will alleviate stress for you. Make sure that you allow at least a month between final acceptance of purchase agreement to closing so there is adequate time to attain signatures, addendums, inspections, title documents,appraisal, and final underwriting approval.

2. Communication is slow during negotiations, and slower once the purchase agreement is signed by all parties.

Expect it to take days to hear back from the bank once you put an offer in on a house.  Any changes to the contract will most often take days if not weeks so it is important that once you sign the purchase agreement, you are prepared to purchase and satisfied with the terms.

 
3. Expect that the bank will not pay for any updates or alterations to the property. What you see is what you get, usually.
The banks have so many properties in their inventory that they do not know the condition of the home, so they sell it with no guarantee or warrantee of any kind.  You will need a home inspection, paid for by you, to satisfy your concerns with the property.  With typical sellers you can negotiate safety and structural issues to be fixed after the inspection. With most banks, they will not.
 
4. Note the type of financing that you have. For example, if you are purchasing FHA, then the home you buy has to be free of mold, peeling paint, and broken windows. On a foreclosure property, these things are problematic because the seller will not fix them, and they have to be fixed prior to closing.  Buyers typically do not want to fix items on a house they do not own, so when you're looking at homes, keep this in mind.

5. Expect to pay to hook up the utilities for the inspection and rehook them up after the inspection.


6. Expect the bank's addendum to have wording that benefits only the bank.  Prior to signing a bank addendum, it's wise for the buyer to have a lawyer look at it.


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