Things to Consider before Purchasing Foreclosed Properties

Currently the chief executive officer of Global Capital Advisors LLC, in San Francisco, Kevin Fitzgerald previously held executive positions with U.S. Select Holdings, LLC, and U.S. Advisor, LLC (dba U.S. Advisors, LLC). While at U.S. Advisors, Kevin Fitzgerald gained extensive experience with Section 1031 exchanges and helped the firm acquire $2.4 billion in real estate, including foreclosed properties.

Also known as a real estate owned (REO) property, a foreclosed home is one that has been repossessed by the lender after the borrower/owner defaults on mortgage payments. Although the process for buying an REO home is similar to any other real estate transaction, there are some things you should consider before purchasing this type of property.

First off, unless you are a real estate expert, it is a good idea to find an agent in your area with experience in buying and selling foreclosed homes. He or she can help you find what you are looking for in your market and will provide invaluable assistance during the often complex transactions that come with foreclosure purchases.

Also, while you may be able to get a discount on a foreclosed home, keep in mind that these properties are typically sold as is and sometimes require substantial repairs. For this reason, it is important to assess expected repair costs and figure them into your negotiating price. However, be sure that your offer is still competitive, since a bank is not likely to accept anything less than what it considers a good price.