Tips About Buying A Foreclosed Property

by Mark Wellborn

Tips About Buying A Foreclosed Property
Map of Foreclosures in DC Area from Hotpads.com

(This article is the second in a series of pieces about different aspects of the foreclosure crisis, and how they affect you. Our first piece focused on how to avoid foreclosure altogether.)

When prospective buyers scan property listings looking for a new home, they usually skip right over the foreclosure section. The general perception is that foreclosed properties are in such poor shape that they are not even worth looking at.

However, foreclosures can be very good buys if the right property comes along. Buyers just need to be willing to put in some work.

“You can get a discount in the range of 15 to 20 percent off the asking price if you do your homework,” Kenn Blagburn of Fairfax Realty told Urban Turf. “However, the banks also do their homework.”

For most of the properties that they repossess, banks get broker price opinions (BPOs) which essentially means that they ask brokers familiar with the area what they think the home is worth, and list it as such. So, while there are deals out there, don’t expect to get a property for half price.

Another important thing to keep in mind is that the banks are not going to make any repairs or upgrades to the property to entice buyers.

“I had a client that had a contract with the bank pending for five months because they wanted a water heater put in and the bank would not do it,” Blagburn said. “When they say ‘as is,’ that is exactly what they mean.”

Two things that will help you immensely when buying a foreclosed property are a good credit score and having a large amount of cash on hand. In fact, just meeting one of the above requirements can put you in good stead.

“I think having a good credit score is more important than having a good percentage of the down payment covered,” Kent Fowler told UrbanTurf. “Four months ago, a client of mine bought a foreclosed home with a good credit score, but not very much money down and still got a great deal.”

Fowler, an agent for Senate Realty, told UrbanTurf that there are not nearly as many properties in foreclosure in DC proper as there are twenty miles or so outside the city. Far-out suburbs like Prince William County, which the Washington Post recently dubbed a “ring of fire,” have been the epicenter of the foreclosure crisis in this area. But if you put in the time, you can strike gold in the District.

“A young couple that I worked with was looking at a foreclosed property about three blocks from the Convention Center that was listed for $630,000,” Fowler said. ”The place was completely restored, brand new everything, and the former owners just couldn’t make the payments. We made an offer at $540,000 that was accepted. A few months later, the house was appraised for $730,000.”

As you head out looking for a comparable diamond in the rough, here are some other things to remember:

  • Be Wary of Foreclosure-Listing Websites – While they give you a wide range of the foreclosures on the market, these sites charge exorbitant fees for using their services.
  • Look in Neighborhoods with Investment Potential – Do research and learn what the property values are for the neighborhoods you are looking in. Neighborhoods on the rise or those where the housing market is resilient are better options than those with bleak outlooks. For example, Shaw might be a better neighborhood to look in than Trinidad.
  • Do Research and Be Patient – Buying a home that is in foreclosure can be a long process, so patience and perseverance are critical. “Due diligence on the buyer’s part is extremely important,” Mika told UrbanTurf. “And so is patience because banks are not the most responsive institutions.”

1 Comment

  1. claude roxborough said at 11:22 am on Wednesday August 27, 2008:

    Great piece.  I particularly liked with this guy Blagburn had to say.

Join the discussion

UrbanTurf now requires registration in order to post comments. Register here, or login below if you are already registered.

Click here if you forgot your password.

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Looking to Give People A Reason to Stay Past 6pm
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Hitting Its Growth Spurt
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »


Profiles of 14 neighborhoods in suburban Maryland

Small-Town Living in the State Capital
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
DC’s Northern Neighborhood on the Cusp
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Fort Totten
Five Years Could Make a Big Difference
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Getting a Vibrancy of Its Own
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Not To Be Confused With Takoma Park
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

New Development Could Shake Up Pastoral Peace
A Little Bit of Country Just Inside the District’s Borders
Not to Be Confused With Bloomingdale
H Street
A Place To Party, and To Settle Down
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
Evolving from a Brand to a Neighborhood
Ripe for Investment Right About Now
The Difference 5 Years Makes
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »

Upcoming Seminars ▾