In the current real estate market, there are foreclosures in every price range. If you’re shopping for a home, it makes sense to include them in your house hunt—especially since some of them are bargains. But which ones? And since the real estate market keeps changing, what are the tricks to successfully buying a foreclosure?
Ilyce Glink, a national real estate expert who has written a dozen books and hosts the Ilyce Glink show on WSB Atlanta, examines the new rules of real estate in her latest book from HarperCollins, “Buy, Close, Move In!” In a recent conversation, she offered these four tips for LearnVest readers:
Use An Agent Who Really Understands Foreclosures
“Find an agent who really understands foreclosures—and has a lot of really good contacts with the agents who represent them,” advises Glink. She notes that the agents who represent the banks are “where the best deals are,” and you want to be sure that they’re part of your agent’s network.
Realize Things Might Take A While
It takes a long time for a house where the owner is late on payments to become a foreclosure—465 days, according to Glink. Even if a house is already in foreclosure and on market, it can take awhile to get the bank to approve the sale and finish closing. So if you expect delays throughout the process, you’re less likely to be disappointed.
Line Up Your Financing First
Glink says one of the best ways to streamline the process is to get your mortgage first, then find a property to buy. “You can close in two months if your financing is in place,” she notes. A chapter of her book is dedicated to how to get your loan. For starters, you’ll need really good credit (at least a 660 score), cash for your down payment (generally 5% of the price of the house), cash for closing costs (usually 2% to 6% percent of the purchase price), and cash for “reserves” —savings so that you can make a couple of months of your mortgage payments in case of a rainy day.
Understand What True Value Is For The Neighborhood
“Labels don’t always tell the whole story,” says Glink, who warns “just because something is a foreclosure doesn’t mean you’re getting a deal.” The best way to know if a foreclosure truly is a bargain is to learn what houses are selling for in your target area—data that your agent can get for you.