Buying Maryland foreclosed homes is a little different from buying a conventional house. You can save yourself on the purchase, but foreclosed homes come with extra costs you might not be prepared for. Here’s what you need to do about purchasing Maryland foreclosed homes.

Maryland foreclosed homes are priced far below their market value, meaning you can get more for the same budget or end up spending less on a house that suits your needs.

But the cost savings of owning a house are just a tiny part of what you need to remember. A foreclosure is a particular transaction that is not like a traditional sale of a house. And if you use the low-price tags of foreclosures as investment opportunities, if you want to optimize your ROI, knowing the process is important.

Here’s what you need to know about buying Maryland foreclosed homes.

What does it mean to foreclose?

The word ‘foreclosed’ suggests that the owner of the house has defaulted on the mortgage, and ownership has been assumed by the lender.

There are two kinds of foreclosed homes in Maryland: bank-owned and real estate-owned (REO). The two are the same in that the owner usually a bank) is the lender. The largest distinction is the foreclosure process in which the home is situated.[bctt tweet=”Meaningful, tweetable quote.”]

In a property owned by a bank, the homeowner has stopped making payments. The bank owns the home and is trying to try to sell it to recover the money owed to it. The bank is working to evict the homeowner from the house during this process. These properties are going to go to auction, but this is not a guarantee of selling the property.

Property purchased by real estate are foreclosures that are not sold at auction. The assets were already foreclosed on and unsuccessfully went through the auction process. Through an REO agent, the bank or lender will try to sell these homes and recoup the money.

Five Stages to Buying Maryland Foreclosed Homes

It can be as easy as searching online to find a bank-owned house. But it’s not as simple or straightforward to buy one of these houses. In five stages, here’s a condensed look at the process:

Get A Mortgage Pre-Approved

Make sure you can get a mortgage before you look for an REO property (or any property). Having pre-approval for a mortgage proves that you’re a serious buyer, something that banks will look at favorably. It also provides you with a price range to shop in, knowing how much you would be offered to buy a home by your lender.

Through Your Agent Discover Foreclosed Properties

When purchasing a foreclosure, it’s hard to go it alone. Your best resource is real estate brokers who are well experienced in foreclosure transactions. They will help you set reasonable goals, consider what banks are looking for, make a bid that can be viewed, and navigate topics such as home and closing inspections.

Get a Detailed Home Inspection

The next steps can be boring once you make a bid on a foreclosed house. Foreclosed homes are often empty prior to being available for purchase for weeks or months, and banks usually do not manage them during the interim.

Although it’s not important for you to get a home inspection, you’ll want to get a foreclosure. Depending on the local market, the inspection costs about $400 or more, but uncovering possible problems is worthwhile.

The inspection will not show everything that’s wrong with the house, but it will at least give you a clear idea of whether you’re buying a cash pit or having a good deal at home.

With a termite inspection, radon investigation, and a sewage and water line assessment, it’s also a safe idea to move forward. Compared to other states, Maryland has an elevated radon level, and just about every county is at risk. The more you can find out upfront about your house, the more you’ll be prepared to move forward.

Resolve Liens on the Home 

Several foreclosed homes have more than one loan in Maryland, meaning you’ll have more than one lien to address. A title company in your area can be recommended by your real estate agent who can help you sort through liens and loans and discover possible conflicts you can face.

Prepare for Problems and Have a Ready Solution

And when a new owner takes ownership, several foreclosed homes are neglected, brace yourself to do substantial repairs and maintenance upon moving in. From electrical improvements to plumbing issues, you will face anything, so make a list of what to tackle first to make your new house feel at home.

To buy a Maryland foreclosed home, work with Anna!

Working with an experienced real estate agent can be invaluable to the process, whether you’re thinking about buying a foreclosed home in Maryland or are already looking for listings.

In the markets of Maryland and Washington DC, Anna Reed is a top-rated real estate agent who understands the delicate phase of purchasing a foreclosed home. Not only can she help you locate shortlisted homes, but she can also help you set reasonable goals for setting a budget and asking the right questions while purchasing a foreclosure house.