Finding Your Dream in an REO - What You Should Know When Buying a Foreclosure

Many homebuyers can find their dream home in an REO.  However, there are some things you should know when buying a foreclosure to help you be a better prepared buyer.  Purchasing an REO can help stretch your dollars, but finding a good foreclosure can be a challenge.

For those who are considering purchasing a foreclosed property, it is important to know exactly how much work will be needed to be done to the property and how much it is going to cost you before you even consider making an offer on it.

Many foreclosures need extensive repairs, but some only need cosmetic fixes.  And a great way to find foreclosures is by going straight to the bank.  You can also find a list of bank-owned properties by searching the Internet for REO properties and name of the lender, such as "REO + Bank of America".  Each listing will usually provide all the information about the property.  You can also enlist the expertise of a real estate agent. 

When buying a foreclosure, it is crucial to have an inspection done.  One lesson that buyers have definitely learned over the past few years is "buyer beware".  You will want to make sure all the copper pipes and wiring are still there if there were any.  Copper theft has been on the rise and these are the most stolen items in foreclosed homes that have set on the market for a while.

Other issues can arise from the property being vacant over time.  However, larger banks will usually hire a service to maintain the property until it is sold to help keep issues to a minimum.

To find out if the home is an REO due to it being a drug lab, you can get a neighborhood environmental report.

Above all, follow your instincts when buying a foreclosure.  It can be the home of your dreams and save you a lot of money.  On the other hand, it can go the opposite direction and end up costing you more money than it's worth.  Therefore, it would be smart to get that inspection so you will know exactly what you are getting into.

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