Tips Buying Foreclosed Homes

2009 July 2

Buying a foreclosed home is a little different from buying a typical resale.

* In many cases, only one real estate agent is involved.
* The seller wants a preapproval letter from a lender before accepting an offer.
* There often is little, if any, room for negotiation.
* The home comes as is, and it’s up to the buyer to pay for repairs.

On the upside, most bank-owned homes are vacant, which can speed up the process of moving in.

“Buying a foreclosure is definitely a bit of a grind. It’s not easy,” says Robert Jenson, owner and founder of the Jenson Group at RE/MAX Central in Las Vegas. “You’re getting fantastic pricing, but sometimes it takes going through a lot of houses and writing a lot of offers to get the home you want.”

In Jenson’s stomping grounds of Las Vegas and surrounding Clark County, the housing bust hit hard, and upward of 80 percent of homes sold are “distressed properties” — foreclosures and short sales. (A short sale happens when the lender agrees to let the owner sell the house for less than the amount owed because the owner can’t afford the monthly payments.)

Nationwide, about one-third of sales in May were of distressed properties. A big chunk of those sales went to first-time buyers, according to Lawrence Yun, chief economist for the National Association of Realtors. “First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales,” Yun says.

5 steps to buying a distressed property

1. Get preapproved for a mortgage.
2. Find an agent specializing in foreclosures.
3. Know how long it takes to sell a home in your price bracket.
4. Study the sale prices of comparable homes in your area.
5. Remember the sale is for the home as is.

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