While the main draw of a bank foreclosure for sale is its discounted price, there are still a lot of pitfalls that can trap a buyer into a less than ideal purchase if they are not cautious. Some fail to plan for the long term considering that a home loan stretches out for up to a decade. Others get lured by the low cost of the property without properly considering the cost of repairs nor the location. Still others just are not up to the challenge of owning and maintaining a foreclosed home.
Taking Stock of the State of the Property
One thing buyers can definitely expect from a bank foreclosure for sale is that it will be needing repairs. Consider a home owner who is already behind on his mortgage and no longer having the capability to take care of his home. You will need the services of a licensed property inspector to conduct a thorough scrutiny of the place and give you an assessment of the repair costs. You should include this expense when calculating the value of the home you plan to buy.
If the foreclosed home is located in a great neighborhood but needs major repairs buyers can go back to the seller to either ask for a discount or ask that the seller foot the bill of the major rehabilitation based on the inspection conducted. Sellers would be inclined to meet you half way as they too would like to sell of the property quickly and your interest is all the incentive they need to give in to your demands.
Turning a Handsome Profit
Those who dabble with investing in a bank foreclosure for sale know its great potential for turning profits. Some buyers live in the home and build equity before selling them off and moving to a new foreclosed home. If you have the cash to spend, you can purchase a foreclosed home for a fraction of its real market value and try your hand at house flipping. After effecting the needed repairs, you can proceed to passing the property off to a buyer at its market value.