5 Smart Ways to Buy a Foreclosure Bargain

Buying a foreclosed home can be an excellent way to find a bargain, but there are also quite a few obstacles to overcome before landing the right foreclosure. The number of foreclosed homes available varies by area and fluctuates based on market conditions. You may be able to save significantly on the overall cost of buying a house and purchase "more home" for the same investment. Understanding exactly what you're getting into is crucial for succeeding on the foreclosure market, and we've got five tips to help you find the right home, for the right price.

1. Never Buy a Foreclosure You Haven't Inspected
   At auctions, you will rarely have the opportunity to inspect the home, and that can lead to major regrets once the keys are in your hand. A foreclosed home may be a bargain compared to a comparable home on the open market, but it's still a major investment. If you want to avoid buyer's remorse, don't purchase a foreclosure sight unseen. Make sure you get the opportunity to complete a thorough inspection.
2. Work with a Knowledgeable Real Estate Agent
   Just as with buying a house of any type, finding the right real estate agent will make life much easier when shopping for a foreclosure. An agent with foreclosure experience will be able to help you avoid common pitfalls, research prices for homes, find the right listings, and ultimately make a competitive bid. 
3. Research the Prices of Comparable Homes
   One way an agent can help you is by providing an analysis of the market for comparable foreclosures. While foreclosure prices are different from market prices, knowing how much a home would be worth on the market will also help you put together a strong bid that still saves you money. You can research on your own as well, by visiting listing sites that allow you to search for foreclosed homes and setting the filter to show foreclosures.
4. Plan for Extra Costs after Purchase
   Foreclosures are sold as is. When purchasing a foreclosure, it's always wise to plan for significant maintenance and upgrade costs after your purchase. If the previous owner was unable to afford their mortgage payments due to financial distress, then there's a good chance that important maintenance tasks may have been overlooked for the same reason. A thorough inspection can give you an idea of the potential costs, but may not reveal underlying issues. And even if the home is in great shape, you'll want cash on hand to customize it to your needs once you move in.
5. Make a Competitive Bid
   All of your research, planning, and the help of your real estate agent will really pay off when it's time to make a competitive bid. While you'll naturally be shopping for a bargain, there is likely to be competition. The right bid depends on the home, the market, the level of competition, and how much you expect to spend on maintenance/upgrades after purchase.

Buying a foreclosure is different from buying a house on the open market, but many of the same rules still apply. Inspecting the home thoroughly, knowing the price of comparable homes, and working with a real estate agent who knows foreclosures will help you make a competitive bid for the right home. While it may take more than one try to find the right match, your preparation and patience can ultimately pay off with a great bargain.

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