Tips for buying a foreclosed home in Seattle, WA

The housing market may still be struggling, but low interest mortgage rates and discount prices make it a decent time to buy for consumers. What were once pristine communities with equally lofty prices are now lovely neighborhoods with drastically reduced price tags.

Foreclosure properties made up 32.5 percent of Seattle area’s resale market in January, up from 29.1 percent from December, according to San Diego-based QuickData. Last year it was 30.1 percent on average, and reached an all-time high in March 2011 at 32.8 percent.

If you're looking to save on a new house, here are five tips for buying a foreclosed home in Seattle:

1. Find one on local listings. Due to the increased amount of foreclosed homes in the market, banks are now listing them on MLS listings in Seattle, newspapers and online on specialty websites. If you don’t have the time required to dedicate yourself to combing through the market, consider hiring a reliable third-party expert.

2. Consult with a contractor before purchase. Don’t let yourself get caught with unexpected costs by buying too quickly for fear of losing a deal. A large percentage of foreclosed homes have been abandoned and may require major repairs to become livable once again. Therefore, hire a reliable contractor to inspect the home from top to bottom to determine what a restoration may cost and how long it may take.

3. Have a large down payment. Before you venture out into the housing market, make sure you are prepared to pay cash or have a significant down payment. Lenders that have been burned by homeowners unable to pay their mortgage are now requiring potential homebuyers to prove themselves.

4. Find an agent specializing in foreclosures. Choosing an expert to help you negotiate the housing market can increase your ability to succeed in the market. It can reduce your chance of falling for potential financial pitfalls.

5. Get pre-approved for a loan. Unless you are paying for the property entirely in cash, getting pre-approved for multiple loans can show your credibility to the seller – the more the better. This will also give you a budget to tentatively work around. However, remember that these numbers are not definite and can change.