What To Expect When Buying a Foreclosed Property

Although the number of foreclosed homes for sale has fallen dramatically over the past year, they are still out there and can oftentimes represent too good of a deal to pass up.  However, buyers should be aware that purchasing a foreclosure is quite different than purchasing a traditional (non-distressed) home.  Here is a list of things to be cognizant of when purchasing a foreclosed home.

• All foreclosed homes are sold "AS IS".  You'll see this in writing approximately 10 times when you are submitting your offer - the foreclosing bank does not have knowledge of the property or its condition, and thus cannot make any warranties to the buyer. 
• Banks do not operate on the same time-frames as we do.  Working with banks can be frustrating.  Expect delays, misdirection, poor communication, etc...  Buying a foreclosed home takes a fair amount of patience.
• Utilties.  One of the most difficult aspects about purchasing a foreclosed home relates to the utilities.  Oftentimes the bank has the water (or gas or electric) shut off, which poses a serious issue for the buyers' inspection and appraisal.  The appraisal piece is particularly important - there are (essentially) no lenders that will loan money on a home without being able to verify that the home has running water.  Make sure your agent looks into this.
• Paperwork, paperwork, paperwork.  Most foreclosing banks use their own purchase agreement to facilitate the sale of the home.  They do this for an obvious reason - they sell houses in 50 different states, each which uses it's own state-approved forms (for example, our Minnesota forms are approved by the Minnesota Association of REALTORS).  Make sure you understand what you are signing, as the forms will differ from the paperwork you might be used to seeing.

This is far from all-encompassing, but should give you some ideas as to what to look for when purchasing a foreclosure.  And of course if you want more detailed/specific information, you can always contact me at josh.pelto@remax.net or (763) 213-4617!