A foreclosure is a property that is sold or repossessed by a creditor or a lender to recover amount owed.
- Why should you buy a foreclosed home?
Most home foreclosures are cheaper than their market values. In pre foreclosure homes, buyers have an advantage as the owners try to sell before foreclosure and banks try to avoid maintenance and running costs. The sellers may also do repairs to add value and attract buyers. Sellers are also required legally to provide complete history of the property condition.
- Pitfalls of a Foreclosure
On the flipside. Home foreclosures have problems. When you buy a home foreclosure, you get it plus it’s everything including unpaid taxes, encumbrances and even liens. Another problem is that you may have to evict the owners, tenants or squatters and you would probably require an attorney to handle this process. The likelihood of you inspecting the house before you buy it are quite low as it’s done fast.
Another problem is the waiting time. Buying home foreclosures take time and vary from one state to another. Legal issues can also come up if aspects are not done well like all documents being filled correctly which can attract post sell legal issues. Since home foreclosures have an uncertainty of floundering or flourishing, getting a lender is an uphill task.
3.How do you go about it?
Even though the cons are more likely more than the pros and you decide to go ahead with it this is how:
- Find an agent who specializes in home foreclosures. This can be done online.
- Get a buyer’s agent. These are usually provided by the seller and does not cost you. -Get a mortgage from banks or mortgage institutions.
- Know the period for selling the home.Foreclosure homes can be bought either by an auction or through real estate listings.
- Common Mistakes by Buyers
Many buyers make mistakes when buying home foreclosures are which end up hurting them in the long run. They limit themselves when looking for a home foreclosures thus making them end up with baggage costs like repairs. Limiting one’s self may make one not end up in a desired neighborhood as they did not give themselves options.
Buyers should also look for professionals who know about home foreclosures who know the probable bottlenecks and know how to maneuver around them. They should also contact lawyers as home foreclosure laws are rather tricky.
Home foreclosure buyers also usually skip inspecting the homes. One should under the ceilings and inside the walls and use certified inspectors. This prevents them from incurring unforeseen expenses like repairs. Buyers are also supposed to have a long term perspective of the home foreclosures and anticipate the value of the property after a period of time. This helps to avoid investing in a property which depreciates in value over a period of time.
- Financing Home Foreclosures
A buyer should talk to lenders before attempting to buy a foreclosure to be pre approved for a mortgage making the buyer more favourable and able to change the mind when offered a better deal by another lender. Obtaining loans for foreclosed condos can be difficult than that of single family home foreclosures as they can flourish or flounder.