In some ways, buying a foreclosure home in Washington State is similar to a “regular” real estate transaction. In other ways, it’s very different. So it’s important to have a basic understanding of the foreclosure buying process before you take the plunge.
Here are five tips for buying a foreclosed home in Washington.
1. Understand how the process is different.
In a traditional real estate transaction, the home buyer deals directly with the homeowner who is selling the property. Even though the communications are often conveyed through real estate agents, the buyer presents an offer directly to the homeowner(s).
Buying a foreclosed home in Washington works a bit differently. For one thing, the homeowner is out of the picture. Houses get foreclosed on when a homeowner defaults, or stops making the mortgage payments. The home is essentially repossessed by the bank or institution that funded the purchase, and then the house eventually makes its way back on the market.
So, when buying a foreclosure property in Washington, the buyer will typically present his or her offer to the bank or organization that now owns the property. Additionally, the process of buying a foreclosed home can sometimes take longer than a typical transaction (where a homeowner is involved).
2. Find a real estate agent who’s familiar with foreclosures.
Unless you’re a veteran real estate investor who has purchased foreclosures in the past, you’ll want to work with an experienced real estate agent. And in this context, “experience” means someone who has helped clients buy foreclosed homes in the past.
We just talked about some of the ways that the foreclosure buying process differs from a regular transaction. So it’s wise to have someone on your side who understand the process inside and out. An agent can help you find a property, evaluate the price, and write an offer in a timely fashion — and those are the basic steps to success.
The best-case scenario is to find a real estate agent / broker who works directly with banks or companies that actually own foreclosure homes in your target area. At the very least, you’ll want to find one who understands the basic steps involved in the buying process. Remember, it’s not a typical real estate transaction.
3. Get pre-approved so you can move quickly.
Unless you plan to pay cash for the home, you’ll want to get pre-approved by a mortgage lender before making an offer. The pre-approval letter will outline how much money you can borrow, based on the lender’s review of your income and debts.
It’s always wise for borrowers to get pre-approved before entering the real estate market. But it’s especially important when buying a foreclosure home in Washington. The market for foreclosed properties tends to move quickly. There are bargains to be found, and a lot of buyers and investors are competing for those bargains.
4. Study the market by looking at comparable sales.
Efficiency is key when shopping for a foreclosed home in Washington State. These properties tend to get snapped up quickly, due to the fact that they’re often priced below market value. So you’ll want to be ready to make an offer at a moment’s notice.
This is where market research comes into the picture. Before trying to buy a foreclosure property, spend some time researching the local real estate market. In particular, pay close attention to recent sales prices for similar properties. This will help you (A) validate the seller’s asking price and (B) spot the best deals.
5. Use multiple websites to track the market.
Websites like RealtyTrac specialize in foreclosure listings. So if you’re serious about buying a foreclosed property in Washington, those sites are a good place to start.
But don’t stop there. Using multiple search sites will give you even better coverage. Most of the major real estate listing websites allow buyers to search for foreclosed homes. Look for a search option that says “listing type” (or something similar), and then check the box for foreclosure or “REO.”
Did you know? REO stands for “real estate owned.” This label is used to describe homes that have been foreclosed on, and are now back on the market. REO properties are typically owned by banks, government agencies like HUD, or government loan insurers like Fannie Mae.
So there you have them, five tips for buying a foreclosure home in Washington State!