(FinancialHealth.net)- For pretty much everyone, buying a house is one of the most expensive ordeals that you’ll have to face in your life. With the property market forcing prices to fluctuate, who knows how much you’ll end up spending to just get some type of permanent roof over your head? Well, why not try buying a foreclosed property? It’s definitely cheaper, but there are a couple of things you need to look out for. We’ll show you a couple of basic principles that you will need to know if you are seriously interested in buying a foreclosed home.
What Does Foreclosure Involve?
Foreclosure basically involves the bank or mortgage company taking the home away from its owner because he/she was not able to pay their loan or mortgage back. As soon as the owner has left, the lender will list this residence as a foreclosed property for sale. Also known as “real estate owned” homes, foreclosed residences tend to be very attractive in the market because it is usually offered at a significantly lower price.
From the lender’s perspective, time is money. It’s in their interest to get a quick sale so that they can compensate for the losses they suffered from when the owner didn’t pay back the loan. At times, the home is placed on auction as well.
Pre-Foreclosure Properties Are a Great Option
In the real estate market, you’ll find that many residential properties are in “pre-foreclosure” status, meaning that the owners have been notified that foreclosure proceedings are about to begin. Now, if you want to buy the house, this is a win-win situation because the owners will be desperate to get the sale done before their debt begins to affect their credit rating. Given so, you have considerable leverage as an interested buyer. The real challenge is being able to find pre-foreclosure homes, but you will still be able to find them on websites like Zillow, which usually have these types of properties listed under “potential listings”.
What Price Are You Ready to Pay?
Sometimes whether you get a foreclosed house or not depends on what price you are willing to pay, especially at an auction. That’s right! Once a foreclosed property has been acquired by the lender, one popular method of getting a quick sale is putting it up for auction.
For you as a buyer, the major disadvantage of this would be that you have no time to do a thorough inspection of the property itself, so basically, you’re paying money for a property you know little or nothing about. On top of that, you don’t even know how much you are going to end up spending on repairs, which is something that you definitely need to take into consideration. Usually, foreclosed homes are not in good condition because of the fact that the previous owners were almost definitely under severe financial pressure and never really had the funds to do proper maintenance. If you’re truly interested in foreclosed homes, then auctions would definitely not be the best way to buy one.
Purchasing Directly from the Bank
In contrast to venturing into the unknown as you would do with auctions, buying a foreclosed residence from a bank or a mortgage company may be a safer way of getting yourself enough time to examine the property before you purchase it. It’s important to emphasize that once you purchase the residence, you will receive it as-is, and it is for this reason that you should have an understanding of what repairs need to be made before committing to completely owning the place.
~Here’s to your Financial Health!
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