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How to Buy Foreclosures Get Pre-approval Then Search

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By : John Cutts    99 or more times read
How to buy foreclosures may be a question that has been occupying your mind as you hear stories about people getting bargain-priced homes during the foreclosure crisis and making money from them or getting their dream homes for their families.

The first thing you should do before looking for homes is to get a loan pre-approval document from a financially stable mortgage lender. The pre-approval letter states the amount you can borrow and the time frame within which you can use the document.

If you are holding a pre-approval document, you have better chances of getting your purchase offer considered by the seller. Knowing your pre-approved loan amount will also help you limit your search to houses within your price range.

You can get pre-approvals online, but make sure you are dealing with a reputable mortgage company. There are now a lot of online entities just fishing for personal information.

When looking for foreclosures, you can start with online foreclosure listings. As you surf, you can also read tips and warnings about how to buy foreclosures and how to buy in places with high foreclosure rates. You can also read about the advantages of using foreclosure listings accessed by paying reasonable subscription fees.

You can also visit the websites of banks to look for their REO listings. Check also if they have exclusive brokers. Oftentimes banks do not have departments that market or sell their repossessed homes and instead hire brokers to sell these homes on their behalf. Contact these brokers as they may have listings that were not yet published on the websites.

Remember also that some banks selling their REOs may prefer that you also take out your home loan from them; others do not have this preference and may also instruct you to get your loan from another bank.

Before making a purchase offer, research the prices of comparable homes that were recently sold near the property you are planning to buy. Do a research on the house its history and condition, either through public records or through actual property inspection. Check also if the bank is selling the property as is, which is typically the case.

If homes comparable to your target property are selling quickly, submit your best offer, but remember to incorporate repair expenses into your purchase offer.

If you are buying the house for investment, check the absorption pace for your type of property. It might take you a long time to resell your property and you might have to relearn how to buy foreclosures.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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