A Risk-Free Way of Buying a Bank Foreclosure Property

by Donald Hanz on Real Estate Investing

Bank foreclosure property is indeed a good investment, but as all investments go there are risks involved in this one. Good investors are able to identify these risks early on and find ways to mitigate them or even totally avoid them.

What Are These Risks

Perhaps the first risk that buyers will face is the danger of spending too much on a bank foreclosure property. Time and again, buyers find themselves spending more on a distressed property than they originally planned. It is quite easy to get carried away with the very low price these homes are being sold for and some buyers fail to consider the incidental costs. It is very important to look at market trends as well as the prices of like homes in the same area. Buyers should likewise establish a budget and stick to it.

Buyers make the mistake of assuming too much specifically concerning the physical condition of foreclosed homes. Never sign off your life savings without first conducting a formal home inspection to be carried out by a professional home inspector. This will give you an idea of just how much you will need to bring the property bank to its livable state.

Some buyers tend to forget that they can negotiate for a lower home price. Based on the due diligence checks you have conducted, you should negotiate some points of the contract to reduce your financial exposure. You should likewise stipulate a clause that will enable you to pull out from the purchase based on the findings of the home inspection you will undertake. The points to negotiate on when buying a bank foreclosure property include the purchase price, the interest rate and the payment terms. You can even ask the bank to shoulder some of the repair costs or give you another discount for the repairs you will spend money on.