7 Steps For Buying a Short Sale Or Foreclosed Home

More people are buying homes and condos. Sales of homes and condos are up 11.4% in the first quarter of 2010 compared to 2009. The reasons are pretty simple – low prices and low interest rates. Short sale and foreclosures are representing over half of all sales in some markets.
Short sales and foreclosures are presenting some truly amazing bargains and getting one of these great deals is what you’re after. To get the best deal, it’s important to follow some critical steps when buying. This short guide will give you the basics of buying in the current market.
1. Know What You Want
What do you want in a home or condo? How much will you pay? Where do you want to be located? Answer these questions before you get serious. The number of properties available in the short sale and foreclosure markets make this step really important. When you’re browsing, this step is not as important, but when you think you are ready to explore buying, you really must define your wants and needs.
2. Know the Market Where You Buy
You need to know the local market and the smaller markets within the broad markets. You can find a lot of information and pricing trends at , , and many others. These services are great for research, but the information is often a few months behind. More current information is available from an active local real estate agent.
3. Get Your Financing in Order
In many cases these days, we are dealing directly with banks and mortgage companies. When we make an offer on a short sale or foreclosure, financing or proof of funds must be in place.
4. Venture Out
Once you know what you want, it’s time to view properties. Viewing properties is a process. You may start with a list of properties that interest you, maybe 5 or 10. You can get that list from different places, but the best list will probably come from your local real estate agent.
You may like a few or none of the properties on the first list. Don’t be discouraged, this is part of the process and quite normal. What the best real estate agents will do is ask you questions about each property you view to determine what you like and dislike. The next time you go out, you will be seeing properties based on those criteria. You continue through the process until you find the home or condo that meets your needs. Then you are ready for the offer and negotiations.
5. Make the Offer
How low should I go?
The offer you make will be based on a few main factors:
* How long has the property been on the market?
* Are there other offers?
* Competition in the price range
* Time and Patience
* You
A two bedroom – two bath condo on the beach at a low price may draw competitive bids. If the property is on the market for a few days and has multiple offers, going well below the listed price will probably not work. If the property has been on the market for a long time, going low makes sense. For short sales and foreclosures, you will often wait for weeks or months for an answer from the banks, so patience is needed. You have a better chance of going low with short sales. Once the bank has foreclosed on a property, they set a price they are looking for based on current market.
Know the local sales numbers. In what price range are most of the sales taking place? In some markets, homes and condos selling under $200,000 make up over 75% of the market. If you are making an offer in a hot price range, there may be more competition.
The decision on making an offer on a property is yours and depends upon you more than anything else. A real estate can offer guidance, but you need to make the decision. Let the real estate agent get all the information available on the property and the most recent similar sales and tell you what they think, but you need to make the decision.
6. After Your Offer is Accepted
After the offer is accepted you MUST get an inspection. An inspection is necessary for you to protect yourself. You also need to carefully read to Title Report, especially if additions or modifications were made. Make sure what should have been permitted was properly recorded.
Read the Appraisal Report. You are looking for errors, missing features and anything else that could make the appraised value lower than it should be.
7. Get Help
A good real estate agent should make the process as easy as possible. Find out who the best short sale and foreclosure agents are in your area. The agent should have training and certification and a track record of closing these types of transactions. If you hire a lawyer or accountant, hire the best you can afford. Get the best help you can.
Following these 7 steps can help you get a great deal when buying short sale and foreclosure properties.

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