A lot of times when you go look at a foreclosure, you're going to have to be ready to make an offer that day. They go quickly! Often a foreclosure will barely hit the market and have several offers. You need to have your financing ready to go when you find the house you want. That means you should have already become pre-approved with a lender and have your letter of approval in hand. It will have to be sent in with the offer. Be sure to let your lender know you are looking at foreclosures and find out what you might want to look for that would prevent your lender from loaning you money on the house. Obviously your DFW Homes REALTOR® will be looking for questionable items too. But the best source of information on financing is your lender. If you're using a VA loan or an FHA loan there will likely be stricter guidelines. Know what they are going into the process.
Sometimes bank owned properties will require a pre-approval with their own bank. It's usually a pretty simple process, but without it, your offer won't even be acknowledged. Ask your REALTOR® if you're going to need another pre-approval letter.
Foreclosures can be any condition from move-in ready to I can't believe a house could be this bad. We've experienced everything from a house that feels like it's moved completely off the foundation to a house that had fresh paint, new appliances, and new carpet, in other words, completely move-in ready. Have an idea going in what items you're willing to accept at the price listed. Remember the bank has a good idea of the condition and price accordingly. Don't think that you will find an issue and have the bank reduce the price. It happens sometimes, but it's rare in our area. Are you only willing to do cosmetic work? A coat of paint can do wonders to a house! Or are you willing to replace appliances, windows, plumbing, AC units, etc. You want to know what your fix-up budget can be. If you're going to get an FHA loan for making repairs, you'll want to know how much money you will have for those repairs.
As much as we plan for everything to close on time, it doesn't always happen. Unfortunately with foreclosures or bank owned properties you're dealing with an entity who is working for an hourly wage, not someone who desperately wants to sell their house. You may find that you need to be flexible on when you will finally get to close on your house. A foreclosure adds a few more people into the mix of things that must be done in order to close on time. Just be prepared for the unexpected. You don't want to live out of your moving van for two weeks.
When you're buying a house from an owner, you are given a seller's disclosure which is to disclose everything the seller knows that is wrong with the house. However, with a foreclosure you're not given that information. The bank doesn't likely know that the drain in the master bath doesn't work or that every year when it rains it comes pouring in through the chimney. While you will have your home inspected by a licensed inspector, they can't find everything. If you are afraid of the unknown, a foreclosure might not be the right kind of purchase for you. Peace of mind for some people has no price tag.
In Texas, we didn't have the rate of foreclosures as a lot of other states, so if you're bent on having a foreclosure, you may not get to be choosy about the features or even the neighborhood. There are some amazing foreclosures to be found in great neighborhoods, but they are quickly snapped up. You may not get the carpet color you want or the appliance types that you're hoping for. If you're looking for a foreclosure, you may need to throw your long list of "must-haves" away. Decide on a couple of things that are required and stick with making sure you have those.
Frankly, there are a lot of people who like the idea of saving money by putting their own sweat equity into a house. And then there are the people who can actually do it. Take a good look at what you realistically can do yourself and what you will have to hire out. The romance of buying a foreclosure and working hard into the night fixing it all may end up being a nightmare for your marriage. Be realistic! If you're the kind of person who swings a hammer and misses the nail most of the time, a fixer upper foreclosure may not be the house for you.
Finally, there is no better experience than seeing first hand what is available for you. Give us a call at 817-707-4383 and let's go look at a few foreclosures. Information is power when looking at buying a foreclosed or bank owned property.
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