Tips on Buying Forclosures

• Forcelosed homes can be a great opportunity to turn a profit, if researched and purchased under the proper circumstances. Don Farrall/Photodisc/Getty Images

  In the wake of the subprime mortgage crisis of the late 2000's, millions of foreclosed homes have popped up across the United States. This means homes can often be purchased for approximately 25 percent below market, according to the website Realtytrac. Buying a foreclosed home is really not that different from a typical real estate purchase, with the exception of a few basic concepts. However, because property values and bank requirements for a foreclosed home can vary, it is a good idea to develop a relationship with a broker or realtor with experience in the foreclosure market.

Budget Wisely

• Before making a quick decision to purchase a home based upon a low price, ensure you consider whether or not extensive repairs are both reasonable for your skills level and are not more than you can handle financially. Also, some foreclosed properties are sold by auction so be careful not to get wrapped up in a bidding war. Enter the auction with a budget and stick to it.

Visit the Home

• Since homes can be foreclosed and sold in a variety of conditions, it is best to visit the home yourself and fully evaluate its condition, as well as the surrounding neighborhood. As you see issues in the home, write them down and understand how much each repair is going to cost before deciding whether or not to purchase the home.

Ask the Key Questions

• Just because you are buying a foreclosed home, it doesn't mean you should not ask the same key questions that you would ask for a normal purchase. In addition, you should understand how long the house has been empty and whether or not it was winterized following foreclosure. Both of these questions can help you determine what items to carefully inspect as well as understand the state of the property.

Have an Inspection

• If you are financing the home with a mortgage, an inspection will likely be required. However, if you are paying cash, it is a good idea to contract a company to perform a private inspection. The inspection will also help you determine your offering price and whether or not it needs to be adjusted due to repairs or other property issues.