What is a foreclosed property?
Foreclosure is the selling of property taken from people who were unable to pay their mortgage. The property taken away from them is sold to others in an auction. Many people think that this is a great opportunity to get great houses at cheaper prices.
This is why most people rush to such auctions in the hopes of getting the house of their dreams. Since times are bad, many people do not have the money to pay the mortgage. There are many houses that have been listed recently and can be bought. It is time that you learned all the things that you need to do before making a purchase.
What You Need To Keep In Mind When Buying A Foreclosed Property?
The property becomes quite a bother to the bank and they want to sell it as soon as they can. This is why do not haste and make sure that you get the property as soon as possible. There are no feelings attached to the property by the bank and this is why the possibility of negotiation is much higher. This is why many people are able to get their hands on foreclosed property for a much lesser price.
Just make sure that you keep everything in account when buying the property. There are different types of foreclosures, it is best that you know them so that you can make a sound decision.
Short Sales
A short sale is when the property is worthless as compared to its original worth before the auction. These houses are usually always from people who are facing financial hardship. If they are able to prove their financial hardship they will be allowed to sell the property. The money from the auction will all go to the official lender.
Pre-Foreclosure
These types of foreclosures are when the bank has clearly informed the mortgagee that they are far too behind on the payments and there is no way around it but to sell the property. For such properties, it is very difficult to get a hold of them as the original owner can take back their property multiple times before the process is finalized.
Sheriff’s Auction
This auction is a public auction after the property has been repossessed. They usually take place on the steps of the property. The highest bidder takes away the property. Keep in mind that if you buy a property from the Sheriff’s Sale you will not be permitted to go see the inside. In addition to that, you need to keep the payment ready on the day of the auction. They however do accept multiple payment methods.
Bank Owned Properties
If all attempts at selling the property, it falls back into the hands of the bank. The property is then listed as real estate-owned property.
Government-Owned Properties
If the property is purchased by a government loan and goes into foreclosure, they come into the possession of the government.
What Are The Pros And Cons Of Buying A Foreclosed Property?
Now that you are buying a house that is foreclosed, there are things that must be brought to your knowledge. There are different pros and cons to buying a foreclosed property. To help you see all sides of the story we have mentioned some of them.
Pros
Low Price
The biggest pro of buying a foreclosure property is its decreased price. We all know that foreclosed properties are priced much lower than what they actually cost. Since the homeowners are usually selling it because of some financial problem, they might not argue much with you for the price of it. They would be glad that their property is getting bought and soon their worries will end.
Quick Dealing
With a foreclosed home you do not have to spend much time getting done with all the specifications you can get a hold of the house as soon as possible. It approximately takes 30 days to get your hands on the property. The only time when the process is slow is when there are any sorts of problems holding the progression of the courts.
A Good Investment
There are times when you can strike gold. Foreclosed houses that need a little bit of renovation can be a gold mine. If you make the right renovations you will be able to get a great resale value. Many investors take a keen interest in the houses being auctioned. The profits that you can receive by selling the same property at a later time are impressive.
Cons
Making a Blind Guess
There are times where you won’t be able to see the house from the inside before you buy it. Because of that, it can be quite risky to buy a house. You can never be sure how it is going to turn out. To get an idea of the inside of the house you can peep through the windows and you will be able to see whatever is visible.
Lots of Renovations
Most foreclosures are not in the best condition and they often need many expensive renovations. If you buy a foreclosed property you might have to set a good budget aside and make all the necessary renovations before you can actually sell it. Many times a lot of the amenities are found missing from the property as people take them with them when they leave the house.
High Competition
When you go for auctions there is always a lot of competition. You might have to bid higher than expected because someone else kept matching your bid. There are many auctions that have also gone online to facilitate buyers but there also the competition is tough.
Now that you have all the pros and cons in front of you, make sure that you tread carefully and are able to make the best decision for yourself. Have a good time property shopping. If you need any help whatsoever, you can always contact a realtor.
