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Buying a foreclosed home is a gamble. On the upside, you might get a home at a tremendously reduced price. A bank or mortgage lender would be looking to get out of a property and will let it go at a relatively low rate. That means you can scoop it up well below market value and potentially own the property and live there, or fix it up and flip it for massive profit potential.

On the downside, foreclosed homes can be money pits. Previous owners that fell behind on their mortgage may not have kept the home very clean. Also, depending on how long the home has been unoccupied, problems might have developed since the last residents were present. Even if you get the chance to do a home inspection before you buy it, there can be an array of issues lurking in there.

It’s a risk, but it’s also a way of finding value in expensive markets. There are things you should know about buying foreclosed residences in New York City.

The first thing you’ll need to do is find a real estate agent to handle the legal side of things for you. They can make you aware of opportunities and help you find buyers. They’ll also have a robust network of professional and personal contacts that can help you everything from staging for showings to getting landscaping done. Try to find one with experience or specialty in foreclosures.

On your own end, you need a pre-approval letter. You need to be able to demonstrate that you can personally finance the home you are buying. Even though foreclosed homes are usually sold at a fraction of their potential market value, they’re still going to cost six figures easily.

Have your real estate agent help you study the comps in the area before you buy anything. Know what equivalent homes are going for so you can factor in a likely rehab budget and purchase price. Your figures won’t be exact, but this is the start of determining your hopeful profit margin.

The reason why your figures won’t be exact is because in New York City, foreclosed homes are sold as-is and sometimes even sight-unseen. There will be no chance for a formal home inspection until after you have the ownership and the keys.