5 Tips for Purchasing a Foreclosure

Have you been thinking about purchasing a home at the Lake of the Ozarks? While there are many options for real estate out there, one thing you might consider is a foreclosure. The great thing about foreclosures is that you can typically get a really great deal on the home as long as you're willing to put in some work. Your Lake of the Ozarks mortgage lender is here to explain foreclosures and offer tips for buying one.

What is a Foreclosure? 

A foreclosure is any home whose original owner defaulted on their mortgage, resulting in the lender repossessing it. The lender is then allowed to resell the home to a new buyer. Often times these foreclosures can be purchased from the bank at a discounted price. Lenders would typically prefer to recoup their losses than have a foreclosure sitting on the market for a long period of time.

Buying a Foreclosure

Buying a home that's been foreclosed on is quite different than your typical real estate transaction. Buying a foreclosure is not exactly easy, but if you can make it through the process, the benefits are great. Not only are you going to get a great deal on the property, but it's sitting vacant, so you can move in without waiting for someone else to move out. On the down side, there's often little room for negotiation and you, as the buyer, will be responsible for any repairs that need to be made to the home. If you're considering purchasing a foreclosed home at the Lake of the Ozarks, keep these 5 tips in mind.

Tips for Buying a Foreclosure 

1. Find a Trusted Real Estate Agent - Find an agent that works directly with banks that own foreclosed homes. Banks usually hire one or a few agents to handle these foreclosures for them. In a lot of cases, the buyer works directly with the bank's broker instead of a buyers agent. A good place to start is to look online for websites with foreclosure listings; the point of this isn't to find a property just yet, it's to find your agent. Many of these properties will be listed as REO meaning "real estate owned". This signifies the home has been foreclosed and the lender is selling it.

2. Get Pre-Approved for a Mortgage - To prove that you are serious about buying a foreclosure, meet with a lender before meeting with an agent. One problem that is seen a lot is that the buyer wants to find a house first and then figure out the financing. However, especially in this case, that doesn't work. Foreclosures typically have really great deals, which means they go fast! The buyer doesn't necessarily have time to figure out financing because the house has already been sold to someone who got their financing in order before even looking at the house.

3. Study the Sale Prices of Homes in Your Area - There is no rule of thumb on what the bottom line dollar will be for these foreclosed properties. Just like with any other real estate transaction, you want to look at recent sale prices of comparable homes in the same area. Since the bank prices foreclosures quite low, it's possible that they will have several offers above that amount at the same time. Therefore, it's important to know both the value of the home and also how much you can afford so you can make a competitive offer.

4. Remember the Sale is for the Home as Is - Keep in mind that foreclosed homes are typically sold as they are. That means you shouldn't expect a discount to cover repairs that need to be made. If you're worried about getting even more of a discount on an already discounted home, you're probably going to lose it to someone else who is willing to pay the asking price.

5. Know How Long It Takes to Sell a Home in Your Price Range - You should find out how quickly homes in your price range are selling. Foreclosures in a gated community with a pool might sell within a day or so, whereas a more modest home might sit on the market for a few weeks. It all depends on the market conditions. If the homes you're looking at are selling quickly, the best thing to do is come in with your highest bid. You don't want to be upset that you lost a property because you bid lower than you were willing to in order to get it. If you really want the home, it's better to just bid the higher price in the first place.

If buying a foreclosure is something you might be interested in, you'll need to get pre-approved for a home loan at the Lake of the Ozarks. As your mortgage lender, I can work with you every step of the way. I'll discuss financing options, offer competitive rates and back it up with the first class service you deserve. Contact me at 573-746-7211 to get started today!

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Michael Lasson

Sr. Residential Mortgage Lender

NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B

PO Box 1449

Lake Ozark, MO 65049

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(573) 693-9141

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.