5 Steps to Buying a Foreclosure in 2021

If you are a new homeowner or you are looking to invest in the real estate market, then buying a foreclosed home may offer many benefits, including: 

• Discounted prices: Sellers of foreclosed homes are looking to make a quick sale and are more willing to lower their prices to attract buyers.
• Quick purchases: The process of buying a foreclosed home is faster than the traditional method of buying a property since lenders want to get rid of the home as fast as possible to recover their unpaid debt.
• Less competition: Foreclosures are typically sold to cash bidders. Since very few buyers can afford to pay cash for a property, there is little competition in foreclosure auctions.
• Clear home title: The title of a foreclosed home is usually clear. The lender typically sorts out all the issues with the property’s title before the sale.

We Can Help You Find a Great Deal on Your Dream Home 

It can be a huge challenge to buy a home in today’s market, especially as a first-time homebuyer. Luckily, our team of top Calgary realtors have the right experience and knowledge to help you get your dream home at a great price! We can guide you through the entire foreclosure process to make the experience as seamless and stress-free as possible. 

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5 Steps to Buying a Foreclosure in 2021 

There are many advantages to buying a foreclosure, but you must remember that the process is more complex than buying a traditional listing. Prospective buyers should also be aware that foreclosures are currently at record lows. Many lenders have stopped foreclosures during the pandemic, but foreclosure levels may tick up in 2021. 

If you are considering purchasing a foreclosed home in the coming year, here are some steps you should take: 

1. Decide How Much You Can Afford

Budgeting is extremely important if you are going to buy a foreclosed property. Although you can buy a foreclosure below market value, you have to do the math first to see if you can actually afford it. Here are some things you should do: 

• List all your household monthly income and expenses to see if you can afford the monthly mortgage payments. 
• Calculate your debt-to-income ratio. If your monthly debt payments take up more than 43 per cent of your gross monthly earnings, you might not qualify for a home loan. 
• Figure out how much you can afford to pay when upgrading the property. A foreclosure might require extensive renovations and repairs and you have to be prepared for this. 

Always keep in mind that if a property is out of your budget, no matter how good the deal might seem, you will end up struggling to make the monthly mortgage payments. 

2. Get Pre-Approved for a Mortgage 

Before you start seriously looking for a foreclosure, you must get pre-approved for a mortgage if you can’t pay for the property using cash. When you have a pre-approval letter, sellers of the foreclosure will take you more seriously. If multiple buyers put in a bid, those that have already been pre-approved for a mortgage will have the upper hand. 

4 PRECAUTIONARY STEPS TO TAKE BEFORE BUYING A FORECLOSURE 

3. Look for Foreclosures for Sale 

Once you have been pre-approved for a loan and you have determined your budget, the next step is to find foreclosures for sale. Some of the places you can look include: 

• Real estate agents: Real estate agents are the first to know when foreclosed homes hit the listing services. Always look for an agent that specializes in foreclosures.
• Newspapers: You may be able to find foreclosed properties advertised in newspapers. However, competition for such properties is likely to be high. 
• Mortgage lenders: You could choose to work directly with the lender. However, competition for bank foreclosures can be very intense. 

 4 BENEFITS OF WORKING WITH A REAL ESTATE AGENT WHEN BUYING A FORECLOSURE 

4. Make Sure Your Offer is Competitive 

Foreclosure homes are often sold below market value, so you might be tempted to make a ridiculously low offer. However, such an offer is likely to be rejected by the seller.

How to make a competitive offer: To make a competitive offer, you should work with an experienced real estate agent. Such a professional can conduct a comparative market analysis to determine how much comparable properties have been sold for recently. 

5. Always Conduct a Home Inspection

When you buy a foreclosure, you will be solely responsible for the repairs. This is why a home inspection is so important. If the inspection reveals any issues that you don’t have the budget to fix, it is advisable to walk away. 

Keep in mind: When you buy a foreclosed property at auction, you will not have the opportunity to schedule a home inspection. 

Our Calgary Real Estate Agents Can Help You Find the Right Foreclosure Property 

Our team has over 40 years of experience in Canada’s real estate industry. We know the stress and uncertainty that can come when buying a foreclosed home and we help mitigate any risks by providing an all-inclusive, one-stop concierge service for all your home buying needs. 

To find out more, contact us at (403) 284-633 or fill in our contact form.