Are you thinking of buying your first foreclosure? If so, you are not alone. Each year in California, thousands of homes go up for foreclosure.
Buying a foreclosed home is a great way to save money and make a good investment at the same time.
How Easy Is It To Buy A Foreclosed Home?
The process of buying a foreclosed home is in a lot of ways very similar to purchasing a regular house. You still have closing costs, often times a mortgage, and other fees.
But most foreclosed homes go up for public auction rather than placed on the real estate market. A certain day is chosen and the home is placed on the auction block.
Anyone can place a bid as long as they show up. The trick is to outbid all the other people at the auction while still trying to get a good deal.
Can I Pay With Cash?
Yes, you can pay with cash when buying a foreclosed home. In fact, it is the preferred method. When you are able to bid with cash, it gives you an advantage over the other bidders.
Cash is king in the real estate market. If you can pay with cash, by all means, do so. But keep in mind, you can still get a good deal on a foreclosed home with a home loan.
You just need to find the right mortgage company to work with, which you will learn more about below.
Will Mortgage Companies Give Me A Loan?
The short answer is yes, you can get a traditional home loan when buying a foreclosed property. But keep in mind that not all mortgage companies are willing to lend you the money on this type of property.
It all comes down to the condition of the home. If the home you are looking to buy is in pretty good condition, then you have a better chance of getting a loan.
On the other hand, if the house is totally destroyed inside, your chances are very small. All is not lost, however, as you may be able to work with another type of lender such as a bank to secure the money you need.
What About My Credit Score?
If you are seeking a loan to purchase a foreclosed home, you will need to have very good credit. Often times the lending company will look at two things.
First, as we talked about above, they will look at the condition of the home. The next thing they look for is a very good credit score.
This is a reassurance that the investment they make won’t go under and that they will get their money back with interest over time.
Should I Get Qualified Before The Sale?
If you are going to use a home lending company to pay for your real estate investment, it is a wise move to get qualified before the day of the sale.
This will help the process go much smoother and you will know how much you can afford to spend.
Knowing how much you have will help you rule out some of the more expensive foreclosures. This will save you a lot of time by not having to attend each and every auction.
Do I Really Need A Real Estate Agent?
If you are wondering how to buy a foreclosure in California, your first stop should be a real estate agent office.
Real estate agents will have a list of foreclosed homes in the area and can help you find one that is right for you.
These agents know their local market and can give you a good idea about the value and condition of each home. They will be able to show you around and let you know more about the area itself.
So whenever dealing with anything related to real estate, make sure you work with an agent. This will allow you to get the best deal possible on a home.
Hire A Home Inspector
If allowed, you should have the foreclosed home inspected. By hiring a home inspector to take a hard look at the home, you will know what you are dealing with.
An inspector will be able to find out what works in the home and what needs to be repaired. If possible, make sure that you are there during the day of the inspection.
This will allow you to see firsthand the problems found. By doing so, you will avoid buying a home that has more things wrong with it than it’s worth.
Hiring a home inspector will not cost you an arm and a leg. Plus, it is a good assurance against a costly mistake.
Make Sure To Shop Around
As we have already learned, there are tons of foreclosures in California. So why rush into buying a home if you don’t truly love it?
By shopping around, you will find a better deal and the home of your dreams. So make sure that you shop around and take your time.
Always Set A Bid Limit
On the day of the sale, you will probably be very excited. This excitement can often cause people to spend more than they should on a home. That’s why it is a good idea to set a bid limit.
This will help you save money and avoid overspending at the same time. It is suggested that you set a bid limit of 80% of the total value of the home.
If you are not willing to spend that much, you can lower that amount to a more comfortable level.
These suggestions will help you on your journey of buying a foreclosed property in the state of California.
If you follow these tips, you will have a better chance of placing the winning bid on the property of your choice.
So if you want to find a great deal, why not start the process today?
📞 Have Questions? Ask The Chris Eckert Real Estate Team
Give The Chris Eckert Real Estate Team a call today at 650.627.3799 to learn more about local areas, discuss selling a house, or tour available homes for sale.