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Should You Buy a Foreclosed Home?

In the last few years, the foreclosure market has become an increasingly important segment of the Indianapolis real estate market. In 2012, more than one million homes nationwide are expected to enter some stage of foreclosure, which means a huge number of bank-owned properties will be available for savvy buyers and investors. But is buying a foreclosed home really a good idea?

Realize before you start that buying a foreclosed home is different from the normal real estate buying process. Because you’re dealing with a bank instead of an actual person, many of the usual rules for real estate go out of the window. While in normal real estate transactions haggling over price is expected, there’s very little room for negotiation in the world of foreclosures. Additionally, most houses come “as is,” with no offer of repairing damage or other issues with the house. While the sales price for the foreclosure might seem cheap (most foreclosures sell for 10-30 percent under market price), keep in mind that renovation or even repairing vandalism from previous owners might add up to tens of thousands of dollars.

Before you start heading down the foreclosure rabbit hole, you’ll also want to have a mortgage preapproval letter in hand. Some banks will require that letter before they’ll even entertain your offer, so having one up front will save you considerable time and aggravation down the road.

Finally, be patient. With the glut of foreclosures on the market, many banks are stretched to the max trying to keep up with the paperwork. Unlike in a more traditional home purchase, where the seller wants to close as quickly as possible, this process can drag out for weeks or even months. If you’re on a tight timetable, a foreclosure might not be the best option. But if you’re willing to jump through some hoops and take the long view, a foreclosure might be worth looking into. Foreclosures tend to make especially good investment properties once they’ve had a little TLC.

Curious in learning more about Indianapolis foreclosures? Contact Polaris Real Estate and let’s talk about your options.

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