Unfortunately, since the mortgage meltdown, foreclosed properties have become more common. Many home buyers see this as an opportunity to find a great home for a bargain price. While foreclosures can offer some nice discounts, understanding how foreclosures work and how this affects the buyer is critical to ensure you are getting a good deal and not a disaster.
What is a Foreclosure?
First it’s important to understand what qualifies as a foreclosure. A foreclosure is a property which has been taken back by the lender in order to satisfy an unpaid mortgage debt. It is owned by the bank or lender and they have now listed the property for sale.
Can I save money buying a foreclosure?
Yes and no! It’s true that lenders do not want to hold onto their foreclosed properties longer than they need to, but they also understand the value of the home in its current condition. While deeply distressed properties might be listed at very low prices, good homes in decent condition might not be listed below comparables in the same area.
Is the buying process different from a traditional sale?
The actual buying process is the same; you write an offer, obtain financing and close. The differences lay in the protections and opportunities for negotiation during the process. Most foreclosures are sold “as is” and the lender will not negotiate repairs of any kind. There could also be clauses which remove other contingencies, such as financing or appraisal. The buyer needs to read the agreement very carefully.
Buying a foreclosure can be a great way to find a nice property at a discounted price. Not all properties are a good deal however. Understanding the foreclosure market and reading the contracts very carefully is the key to buying a foreclosure – this way you get the most home for your money without buying a problem.
If you would like more information about foreclosures and whether buying one is right for you, feel free to reach out to me.