Foreclosures can be messy and difficult, and they are sure to test your patience. But the end result could be all worth it. For us, the house being in foreclosure was what made the deal. Simply put, we could never afford the house had it not gone into foreclosure.
Here’s our home-buying process in a nutshell: in November 2012 we looked at the house but weren’t sure if we were ready for that commitment, or if we would even live in that town (we lived 3 hours away at the time). In early December, someone else put in an offer and it was accepted, and we were surprisingly devastated. We knew we wanted the house. That offer fell through and we submitted our offer on a Monday in early February 2013. We low-balled at $35,000 below asking price, argued with the bank all week long, and finally settled right in the middle that Friday. We closed May 10, 2013 and work began May 20. So that’s our story.
Every house and every purchase is different, but these are a few of the lessons we’ve learned. Some were easy lessons, and some we learned the hard way.
1. Be patient. This is without a doubt #1 on the list. To you, it’s the one home that you’re trying to buy. For the bank, it’s not personal at all. It’s one of many on their books, and it has to go through a certain process. And those guys are NOT in a hurry. Ever.
2. Find out how long the home has been vacant. The longer a house has been uninhabited, the greater the chance for major problems. Some of the biggest issues include plumbing issues, leaks, heating/air problems, and pests. When checking out the house, be sure to test the faucets and toilets, as these generally have trouble working after not being used for extended periods of time. These hidden costs can turn a bargain house into a money pit very quickly.
3. Get a full inspection. I don’t mean just the “walk around and look at stuff” kind. I mean the prodding and poking and crawling under the house kind. Many foreclosures will not include disclosures, meaning you have no way of knowing what may have gone wrong in the past. Hire a pest inspector, hire a heating and cooling inspector, hire an engineer. Whatever it takes. Trust me, an inspection is the best money you will spend on the front end. Keep in mind that not all foreclosures are good buys once you add up what will be needed to renovate.
4. Make sure the house is insurable. Because we could not live in the house as-is when we bought it, we had to take out a builder’s risk policy, which was way expensive. You need to take those expenses into account when figuring purchase price and what you plan to spend renovating.
5. Be flexible with your closing date, or be firm from the very start. Our closing was extended several times, but that was fine with us. We were still in a lease with our apartment, so pushing it back only helped us. But if you’re in a time crunch, it’s going to be very difficult to get the bank to stick to a set date unless you make that completely clear from the beginning.
This is great advice and I’m glad your patience paid off. Y’all were meant for that house.
All great tips, but above all, #1 is the hardest and probably the most important. I look at what you and CP have gone through restoring (rebuilding) that beautiful old home, and without patience (sometimes hard for you!!), I’d be visiting your graves now! I am so proud of all you’ve done, proud of the forever home you have created, and proud that you’re still happily married! You have survived and continue to survive an unbelievably difficult task…but what joy comes at the end! Well done kids, well done!
This is good information. When we bought our house, we were on a tight timeline (less than 90 days until our lease expired), so for your tip #5 we decided to avoid foreclosures and short sales. It’s true you have to be patient and flexible because the other parties involved may not be so invested in a quick timeline. We luckily got a good house/deal anyway, but I’m glad you were able to find a foreclosure and work with the changing closing date to get the house you wanted!
Thanks, Laura! A foreclosure is definitely not for everyone. We lucked out that we stumbled upon ours at a point when we weren’t on a time crunch! :)
Great tips and congrats on your new home!
It’s really great to hear about the foreclosure process and that you guys were successful despite being patient. It’s a hard to believe that stunning house was a foreclosure. You two do amazing work!
Thanks so much, Cathy! :)
Congratulations on your new home – sometimes you don’t realise what you want until someone else snaps it up! Stopping by from #magicmoments
You’re exactly right! Thanks for stopping by, Kate! :)
Thanks so much for these tips. My husband and I have been considering purchasing a foreclosed home, but had no idea what to look out for. Thanks again! I found your post at #BloggersBragPinterestParty !
Great tips for those who aren’t really aware of what they need to look out for when buying properties that have been uninhabited for a while. Dropping by from Magic Moments
Great tips. Buying a house is stressful. We bought a short sale and it was an interesting process at times. Thanks for sharing. Looks like a great house.
Angela @ Time with A & N
Thanks, Angela! :)
Great tips! Thanks for sharing with the Merry Monday Linky Party!
Oh boy! We are about ready to buy, and these are really great tips. We have heard about foreclosures, and how they can be a good deal, but I never thought about all these problems! Thanks so much for posting this!
Thanks for visiting, Bethany! Foreclosures can bring a lot of problems, but all in all, our experience was pretty great. :)
All great tips, Sarah! i’m glad ya’ll had a great experience!
Awesome post! Pinned. I’m always impressed with your posts. Please join us tonight at 7 pm. I can’t wait to see what you have been working on! http://loulougirls.blogspot.com/
Happy Monday! Lou Lou Girls
Thanks for sharing these tips at the Teach Me Tuesday Linky Party!
(Late) Congratulations on your house. Great tips for someone looking for something in their price range. I still dream of a foreclosure I fell in love with a few years ago. The instant I pulled up the driveway (just out of curiosity) it pulled at my heart. Still sad about it but the amount of work – oh goodness. They actually ripped out all the copper piping from the heating. It was such a sad house.
Thanks for stopping by, Heather! There are definitely A LOT of pros and cons to every foreclosure, and sometimes you just have to walk away. All of our copper was stolen too…HVAC, pipes, etc. It was not an inexpensive fix to say the least! ;)
It seems like there some good in looking at foreclosure homes. Well, when negotiating with an agent about purchasing a foreclosed home, will it be best to have an attorney from a law firm nearby to help out with the process? To me, it’s something that I first thought about because usually there are paperwork to be read and signed.
Hi Correy! In NC, we were required to have an attorney for closing. I lucked out in that my husband is an attorney, so he made sense of all the big technical terms for me. I would definitely look into hiring a lawyer though, even if it’s just for peace of mind. You are a lot less liable should something go wrong if you have an attorney. Just my 2 cents…
Sarah, when buying a foreclosed home, would you need homeowners insurance for it? So far, my wife and I have found some good foreclosed homes that we think are still in good shape. The only thing that we are somewhat worried about is how much affect a homeowners insurance would do for homes like those.
Hi Andre! To be honest, that is totally dependent on your local government, your state, and your insurance carrier. We didn’t live in our house for the first year that we were working on it, so we had to have builder’s risk insurance during that time. Once we moved in, we were able to switch to homeowners, which was a whole lot cheaper. We did have trouble finding a carrier that would cover our house due to knob and tube wiring (and don’t let them fool you…K&T is totally safe as long as it is well covered!), but we eventually found one that worked for us. I hope that helps! :)
Sarah, I just stumbled on your blog because my husband and I are very interested in a particular foreclosure. When negotiating with the bank were you able to try to reason with them and explain your offer? We have pulled comps of the houses in the surrounding area and we think the foreclosure is overpriced in addition to the $20,000 worth of fixes needed. I’m just afraid if we low ball our offer too much they wont consider us and we won’t get to explain our offer.
Hi Molly! Thanks for stopping by! Our first offer was flat out rejected by the bank. Even though we had plenty of reasons to support our offer, they didn’t want to hear it. They didn’t even counter. So we made another offer…according to them, it showed them that we were serious and so they started working with us. We still ended up meeting pretty much in the middle between the asking price and our first offer. So if they reject, I would just try again. Also, a good realtor can really help you through that…banks tend to listen to realtors more than home buyers. Good luck!! :)
Hey, thanks a lot! How much does it normally cost to get a plumber in most cases?