Many people look at purchasing a foreclosure because the price is right. If you are thinking of buying one, here are some things you should think about.
Once a property is listed as a foreclosure on the MLS, it has gone to a court ordered sale. The dealings will be through the realtor the bank has appointed therefore there is no way of dealing with the seller directly because the bank is now the seller.
If you are lucky enough to be the first accepted offer on a foreclosure, then you will usually have time to organize your financing like any other purchase. Your realtor will likely write in a financing clause in your favor which will give you a week or so to get your documents together before you have an unconditional offer. The things your bank will require are verification of income, down payment, appraisal etc. This is great because you will have time to remove your financing with confidence that you are in a position to close on the deal.
Most buyers looking at a foreclosure are not the first bid in and in this case there are more risks in trying to purchase the property. The way you will present you offer will be in court without the opportunity to remove a financing condition. The reason is because the bank will not begin to work on your application specific to the property until you have the right to finance it – meaning until you have an accepted offer. This means if you win the bid in court and don’t get your financing together you must be prepared to close the deal in cash.
Most people are not in the position to close the deal in cash so being preapproved is extremely important in this case. You should know how much you can afford in advance. You should also have your lender review your income, debts, down payment etc as well.
To the best of my knowledge, all lenders will require an appraisal and sometimes and home inspection on a foreclosure. If the property is not in decent condition, the bank may not want to finance the property regardless if you have been preapproved so it is a good idea to do the home inspection/appraisal before you go to court at your own expense. It is also a good idea to see if your lender will review these items in advance to ensure this would be a property they would consider financing.
Another tip would be to research the property to make sure it has never been deemed a grow-op.
Even if the property has been remunerated, many lenders will not touch the property meaning you will have to scramble to get another lender to look at the deal.
If you have questions or concerns about this subject or any other mortgage financing, don’t hesitate in giving me a call.
Marla Daniels
Mortgage Consultant
Prolink Mortgage (BC) Inc
Phone 250-733-2201
Toll Free 1-877-733-2201
Leave a Reply