In today’s challenging economic times, the subject of buying a foreclosure can come up. Television shows proclaim you can buy a house for little or nothing down or for $10,000, or $20,000 and people become either excited about the potential deal or wary of the potential pitfalls. Buying a foreclosure is like any other purchase decision and the same rules of due diligence exist. Les Christie, staff writer at CNNMoney.com, has written an informative article on the prospect of buying a foreclosure.
The article starts by explaining the 3 stages of foreclosure purchasing: pre-foreclosure, sheriff’s auction, and repossession also called REO (Real estate owned by the bank) and the characteristics of each. Whether you inspect the home thoroughly and what potential level of pricing and the 2 major points covered here. After the types of foreclosure purchases are covered the article covers the common mistakes foreclosure buyers can commit. Most of these errors appear to be related to inexperience and not taking the time to review all the data available.
The areas include: getting caught in a bidding frenzy, under estimating repair costs (which can be devastating for a novice), not knowing what comparable properties cost, buying in a neighborhood flooded with foreclosures and not having financing in place. The message appears to be either do lots of homework or align yourself with experts like realtors and general contractors if you want to venture into this potentially rewarding (and scary) arena. If you’d like to learn more, read http://money.cnn.com/2010/05/04/real_estate/how_to_buy_a_foreclosure/.