5 Secrets to Buying a Foreclosure in West Palm Beach

by Rodney Forbes on April 5, 2009

Article by Rodney Forbes

foreclosures-ahead1So you’ve been reading the news about housing recovery, government tax credits and record low interest rates. Or maybe you’ve gone to a real estate seminar or taken a course on buying foreclosures and bank REO’s.

Buying a bank owned property can be a great way to buy a home well under market price. But you must be careful and avoid making some common mistakes when dealing with foreclosures.

1. Never contact the listing agent (the person on the yard sign)
This person works for the bank, not you. ALWAYS use a buyers agent when purchasing a home, foreclosure or otherwise. This person looks out for your interests and helps to negotiate the best price and terms for you. But a common misconception is you are paying them. Not true. The sellers pays the commission to both the listing agent and the buyers agent. Always look for an agent who is experienced in dealing with bank foreclosures and who works with buyers.

2. Be pre-approved for a mortgage first
Don’t waste your time trying to submit an offer without a pre-approval letter. The bank wants to sell the property as quickly as possible. Remember, they’re in the banking and lending business, not the real estate management business. Your offer will get priority with a strong pre-approval letter. This will also insure you’re looking in the right price range.

3. See past cosmetic fix up
This is where you can find the real diamond in the rough. Most bank owned properties will need some fix up. Many buyers are turned off if a home is not in move in condition. This is where your real opportunity lies. Paint, carpet and clean up can make a major difference in the look (and value) of a home. Don’t let these small items deter you. Major fix up is left up to the inspection.

4. ALWAYS pay for an inspection
This is your insurance policy against buying a home that needs major fix up that you didn’t count on. Your contract should ALWAYS be contingent on the outcome of the inspection. You have the right to cancel the contract and get your deposit back if the inspection comes back with major repairs needed (Secret: If the inspection comes back with many repairs needed you can re-submit another offer at a much lower price and have the inspection report attached to the offer). Most banks have no clue what condition the property is in, until you tell them.

5. Look for the ugliest home in the best neighborhood

Look for the best neighborhood in your price range and see if there are any bank owned properties there. The price will most likely be well below what comparable homes are selling for. Once the home is back in really good condition, it should be worth what other homes in the neighborhood are worth, no matter what you paid for it. And the neighbors will be very happy that you have taken the community eyesore and made it a beautiful home again.

As a buyer specialist and a real estate investor for ten years I can tell you bank owned foreclosures can be the best investment of your life. But you have to be careful and have someone in your corner who has been there before and who can guide you through the process.

If you are interested in buying or selling a home in the Palm Beach County area, specifically Palm Beach Gardens, Jupiter and West Palm Beach, please visit my Forbes Realty website. For frequently updated information on foreclosures, short sales, real estate news and market conditions visit my South Florida Real Estate Report blog. There are many free reports as well as free access to MLS listed properties.

Rodney Forbes is a licensed Realtor®, certified short sale/REO specialist and broker for Forbes Realty of South Florida Inc.

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