If you’re a first time buyer, buying a home already seems a bit more complicated than just renting since there’s new steps, so unless you understand how simple it is to buy a Foreclosure, you’d probably feel it’s a bit over your head.
The basic definition of a Foreclosure is a property that has been repossessed by a bank because the homeowner defaulted or stopped making the house payments. The banks don’t make any money off of those properties once they are repossessed, so they need to sell them to a new homeowner as soon as possible. That means a lower than market price home for a prospective buyer.
Due to the increased number of Foreclosures, most of them are listed through a Real Estate agent and you don’t have to go through a live auction. A good way to get started is to get a list from your Real Estate Agent that specializes in these types of homes.
Click here for a Free List of Foreclosures In Your Area.
So what are some of the drawbacks? One is that if the property has been on the market for a long time, it usually sits empty without any utilities or maintenance at all during that time. A bank doesn’t really care too much about the condition of the home since that’s not their business in the first place. This may require a bit of cosmetic repairs or small projects from the new homeowners.
A common concern is any past title defects or liens on the property from the previous owners, etc. since the home obviously had some issues for it to end up being Foreclosed on. Well that’s what Title Insurance is for. Your real estate agent should make sure you get an Owners policy which protects the new you against defects in the title, undisclosed liens, forged signatures, or defects in the documentation.
If you’re interested in buying a home that’s below market price where you will most likely make a bit of money by selling it in a couple of years, then a Foreclosure is a good idea for you. You’ll limit a lot of your options, but you’ll get a great deal!
Let me know if you have any questions.