There are many real estate markets around the United States where a foreclosure provides an affordable way to purchase a home.
Professionals working in the real estate industry agree a foreclosure can provide people with the opportunity to get a great deal.
It is possible when looking for a foreclosed home to find an excellent deal in any price range. There are certain things people must realize when considering purchasing a foreclosed property.
Pre-Foreclosure
This is a period of time when the mortgage holder of the property has fallen behind in their mortgage payments. At this time, the lender is in the process of getting physical custody of the home from the mortgage holder.
When a home is sold at this point, it will often involve a short sales process. This is when a lender will agree to accept a specified amount of money from a purchaser that is less than what the mortgage holder owes on the property.
In-Foreclosure
Should a property currently be in foreclosure, it can be sold in an offline or online auction. It can also be sold by a real estate agent. This situation attracts many buyers.
They see the potential savings in a foreclosed property when comparing it to similar properties that are not distressed.
In some situations, the discount could be as much as 15 percent or more when compared to other houses in the same market. How much a buyer will save will depend on the local real estate market.
Risks
It’s important for anyone considering purchasing a foreclosed property to realize there could be many different potential risks involved. It is possible, if a person purchases property for sale at an auction, they will be getting the property sight unseen.
This means a buyer won’t be able to inspect the property prior to bidding on it. Should a buyer be in a situation where they can inspect a home, they will have to purchase the property in its current condition.
Once the property is purchased, any problems are solely those of the buyer. In some cases, individuals have removed any element of value in a home prior to leaving it.
Foreclosure Property Listings
When someone is interested in purchasing a foreclosed property, they can often conduct a property search at different banking and mortgage lending websites. Large banks including Bank of America, Wells Fargo, and others maintain a listing on their website of foreclosed homes to buy.
There are also government-sponsored companies who maintain a listing of foreclosed properties on their website. These are companies like Freddie Mac and Fannie Mae.
There are also many private companies who provide listings of foreclosed properties online for a fee. A local real estate agent will know the foreclosed properties in the areas they serve.
Financing
When trying to purchase a foreclosed property, it is possible to obtain conventional financing. Some people are successful at obtaining loans from the Department of Veterans Affairs as well as the Federal Housing Administration.
In many cases, individuals with deep pockets are in the best position to purchase a foreclosed property. This is a very competitive market.
People with cash can come in and easily purchase the best deals available. When people are considering getting financing to purchase a foreclosed property, they need to have it approved as quickly as possible. Those who are selling foreclosed properties prefer cash-only buyers.
In this situation, there is no lender who will require a home inspection or home appraisal. It’s also important to realize when purchasing a foreclosed property, it will often require an investment to get it up to code and more.
After Purchase
In most situations, after a foreclosed property is purchased, it may require different levels of repair. Many of them will need to have their windows, as well as the kitchen, replaced.
Doing this will often help provide more of a return on the investment when compared to other types of work.
Some properties will require the buyer to decide on which repairs are the most important. This is often determined based on a buyer wanting to keep the property or quickly sell it.
There are benefits associated with buying a home that is a foreclosed property. It is possible for someone to get the home of their dreams and pay significantly less than the cost of similar homes in the same neighborhood.
People should know all the benefits and risks associated with purchasing a foreclosed property. Doing this can help avoid problems and help make the experience a positive one.
