Always get a foreclosure inspected by a home inspector before you hand over your money. You want to know that the home does not have any issues that will be prohibitively expensive to fix after your purchase.
You do not have to get a home inspection, but your agent will advise you to regardless. You want to be sure that things like the foundation, electrical system, plumbing, and roof are in good enough shape to justify the purchase. Otherwise, you could spend more making the home habitable than you would have from just buying from a regular seller.
How to Find a Foreclosure Before They Hit The Market?
Lots of prospective home buyers ask the question, “is there a way to find out about foreclosure properties before they hit the market?” Well, there is a way to potentially increase your odds. A company called Realty Trac publishes data of homeowners who miss mortgage payments.
In most circumstances, these people have run into a short term financial crunch. They miss their mortgage payment but eventually get caught up. It is worth checking though, as a few will slip through the cracks or are excellent candidates to short sale their home.
Here is a link to their pre-foreclosure property search tool. You will be able to search by state to find potential foreclosure properties. You will see these properties on Zillow like they are listed for sale which is very misleading. I get calls from buyers all the time asking about these pre-foreclosure homes, many of which never actually make it to the market.
For homes that have already been foreclosed and are bank-owned, Realtor.com has a helpful foreclosure search tool for them.
So, how can you make your offer stand out and get accepted in a multiple offer situation? Here are several tactics to help you write a competitive offer and win the bidding war:
- Provide appraisal gap coverage
- Increase earnest money deposit
- Shorten your inspection period
- Cover your own closing costs
- Include escalation clauses
- Provide occupancy
- Waive your commission
Let’s define and go over these tactics in a little more detail so you can use one (or a combination of several) when writing your next offer.