Buyers feeling priced out of San Diego costs are often intrigued by buying a foreclosure at significantly lower prices, bringing a once unattainable market into reality. Searching for a foreclosed home is a no-brainer for many buyers in the housing market.
It’s a great financial steal resulting in a (usually) larger home in a highly desirable area. Eventually, the property can even serve as a strong investment when it is placed back on the market for a larger price tag than originally purchased for.
However, when it comes to decision-making time, it’s important not to be wooed by the low price and San Diego sunset without getting all of the facts. Purchasing a foreclosed home can be tricky and has the potential to become an enormous financial burden instead of an investment.
Play the foreclosure cards right with some of the strategies described below and earn a strong investment for now, and in the future.
Get Financially Prepared
Any investor will tell a buyer it’s important to get all finances in order before any big purchase, but this becomes increasingly important with foreclosure purchases. With inspection and legitimate cost assessment limited before a sale, buyers can be at the mercy costly repairs or debts.
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While some San Diego foreclosed homes have been obtained by the bank and fixed up, many are sold as-is by disgruntled homeowners without the means to maintain or repair it. You may encounter an incredible piece of property sitting under a home that requires thousands of dollars in repair needs or has to be knocked down altogether.
Be prepared to have some cushion to pay for these and other needs that may arise after purchase and inspection. Many banks won’t lend money to buyers purchasing a foreclosed home, so this burden will fall squarely on the buyer.
Identify Trusted Advisors
With a host of potential costs, repairs, bank red tape, and legal questions, having an informed team of professionals to rely on is crucial to getting the best property possible. Work with a financial advisor to set a budget for the actual price of the home.
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Factor in the cost of the repairs, and then figure out together if this price is still competitive in the marketplace. Often it will be, given the pricey San Diego market – but sometimes the financial burden and headache of a foreclosure will not outweigh a traditional sale.
A trusted advisor can also help a buyer face some of the difficult questions involved in a foreclosure sale above the standard budget and mortgage obligations.
Will they become responsible for any debt owed on the home?
Are there previous construction loans or unpaid taxes?
What stage of foreclosure is the home in and how will that impact the sale?
If the bank already owns the property, there will be a slew of additional contracts and addendums issued by the bank setting terms before purchase. The home may have been sitting unkempt for quite some time and in terrible condition with little protection offered to the buyer in the fine print.
Remember, the bank wants to get rid of these properties as quickly as possible, so there may be terms that work against or rush buyers. Banks may even cancel without notice if a better offer comes up.
Invest the time in learning how to navigate these murky waters to avoid a dangerous, costly purchase.
Act With Patience
A foreclosure sale can set buyers up for a rollercoaster adventure without clear-cut timelines. Trying to complete a purchase in time for the new school year or immediately following a previous home sale? Enter the process with patience and understand alternate arrangements may be necessary if something falls through or goes off-schedule.
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Evictions, if necessary, are difficult, lengthy, and may abruptly cease altogether if the homeowner can provide the bank with necessary funds. If the home is not move-in ready, it may need extensive repairs and even need to be reworked following an inspection.
The paperwork in foreclosure sales is broad, and the response from banks, current owners, lenders or other parties involved may take weeks or months to coordinate and again, may cease abruptly.
Conversely, the sale may take significantly shorter than expected to require buyers to act fast and produce money they may not have been prepared for on such short notice. The competition for foreclosed properties is steep with many purchasers throwing attractive in-cash sums at the first big opportunity.
Often, buyers are not house-hunters but investors with years of experience in short sales that may act just a bit swifter and blindside their competition.
It is Possible
Preparation is crucial, and the resources to do so are abundant. Buyers with finances in order, an understanding of the San Diego market and patience for the unexpected will be able to succeed in the successful purchase of a foreclosure property.
If you are fully ready to become a homeowner, give Richard Realty Groups a call at 760-889-2455 and open up a new world!