5 Tips for Buying a Foreclosed Home

Written by Posted On Monday, 30 September 2019 06:50

Are you good at taking risks? You may have to consider this when looking to buy a foreclosure. Buying a foreclosed property can be a good real estate investment strategy. However, these investments are not for everyone.


Although there certainly are deals to be found when looking to buy a foreclosed property, the process is not for the fainthearted! You’ll do much better if you inform yourself as to what you can do and what you must. Here are some tips for buying a foreclosed home:

1. Start the process on the right foot

Prepare yourself to be successful when buying a foreclosure, particularly if you are a beginner in this game. Make sure to keep these points in mind before setting off on your property search:


  • Have enough money for a down payment of about 20% of the property’s value

  • Have on hand enough cash -beyond the cost of the property itself- to cover all necessary repairs

  • Have in place enough funds to allow you to cover 3 to 6 months of expenses ( mortgage payments , property taxes, etc.) to allow time for the renovations

2. Don’t assume all foreclosures are great deals

Don’t approach the possibility of purchasing a foreclosed home as a slam dunk. It would not be wise for you to assume that, because the property is owned by a bank, it will be cheap, listed well below market value. Enlist the aid of your broker to do a thorough comparison of similar properties in your area before writing your own offer.

3. Make sure to ask for an inspection

By definition, a home that is owned by a bank (and may have been owned by them for some time) has not been closely looked after. Any repairs or improvements needed will be your responsibility. How much are you willing to put into this house? To get an idea about the extent of these projects, get a home inspection done by a licensed inspector. You may also specify that the purchase of the home will be contingent on what is found during this inspection.

4. Banks are not desperate to give foreclosed homes away

Obviously, banks want to resell foreclosed homes, but not to the point of giving them away. In most cases, banks will not even consider offers that are extremely low. Before that, they will themselves reduce the price. If you really want to buy this property, play the game right and do your homework before submitting an offer.

5. Get pre-approved for a mortgage

Foreclosed homes do not need to be paid for in cash. Get yourself a preapproval from your bank before approaching a foreclosure. But keep in mind that houses that are in very poor condition may make it tough for you to get a mortgage from a bank. If you are in an especially competitive market, having a preapproval may get you the house.


The greatest advantage of buying a foreclosed house has to be its price. But to get this deal, you must understand the process and learn how to do it the right way. If you are thinking about exploring the foreclosure market, enlist the help of a Redhead Realty agent that specializes in foreclosures. With Redhead Realty in your court, you will be ready to make the best offer to get that coveted property.


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James Stevenson

Hi, My name is James and I've been involved in the property and real estate industry for 10 years now. I hope people will like to read about my thoughts and experiences in the industry and please contact me if you want to discuss my articles further!

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