Thinking of Buying a Foreclosed Property?

by c21commonweath_ldowling 5. February 2020 09:34

Depending on where you look when you’re house hunting, you may find quite a few foreclosed properties on the market. These houses tend to sell for low prices, but they may come with issues. Before you get serious about foreclosed properties, check out our list of the pros and cons of buying them. First, what is a foreclosure? When a homeowner can’t make their payments, the lender may repossess the property. They’ll usually sell it in a foreclosure auction soon afterwards. When you’re researching foreclosed houses, you may also see the words “real estate-owned property” (REO). REO properties are the foreclosed homes that didn’t sell at auction.

The Pros

  • Foreclosed homes are typically eligible for traditional home loans.
  • Banks are eager to sell foreclosures. They may be flexible on closing costs, down payments, price, and more.
  • If you have the money on hand to pay the outstanding balance, you’ll be in a commanding position to negotiate from.
  • Foreclosures come with clear titles.

The Cons

  • When you buy a foreclosure at auction, you pay in full immediately.
  • Foreclosed homes often need repairs and upgrades, which can be very expensive.
  • Sometimes, the previous owners aren’t gracious about losing their home and may damage the property or cause other trouble for the next owners.

If you’ve weighed the ups and downs and buying a foreclosed property still sounds good to you, here’s how to get started:

  1. Find Some Foreclosures: You can find foreclosures through newspaper listings, public records, or an online search.
  2. Verify the Foreclosure Status: Before you do anything else, make sure the properties you find are still in foreclosure.
  3. Visit the Properties in Person: There’s no substitute for seeing a house and the neighborhood with your own eyes. It’s always a good idea to get a home inspection if possible.
  4. Get a Title Search: Few things are worse than buying a home only to find out later there’s a lien on the property. Protect yourself with a title search.

The best advice for anyone buying a home is to talk to a realtor first. Realtors have the knowledge and experience you need to avoid a bad deal. Buying a foreclosed property can be a great move, but make sure you go in with both eyes open.