What to Consider Before Buying a Foreclosed Home
Buying a home that has been foreclosed upon can provide large profits for potential buyers and investors. During stressful economic times, many great homes go into foreclosure due to job loss or other personal and financial hardships, and it can be advantageous to take a look at these properties as they become available. However, finding a foreclosure isn’t always easy – you have to make sure and do your homework, researching whether or not this purchase is worth the time, effort and money that goes into the process.
First, find a real estate agent who is experienced working with foreclosures, that way you are dealing with a seasoned agent who can offer the best advice throughout the process. The safest deal is with a bank-owned property, that way there are fewer risks, no taxes and liens and no tenants that need to be evicted.
There are foreclosures that are riskier than others, particularly if you’re going to buy a foreclosure at an auction. Buying from an auction means you can’t go in and inspect the property, and you also may find other liens against the home. Generally homes that sell at auctions will provide you with the lowest purchase costs, but be prepared to pay cash, as you won’t be able to take out a mortgage for this type of home. In providing mortgage financing, it is essential for us to inspect the property and have an appraisal done in order to protect our clients from making a purchase that is not worth their time or money.
A banked owned property is the safer option; this occurs when the bank has the title and owns the home. Typically you’ll find that the property doesn’t sell at as big a discount as at an auction, but there is much less risk, as you can obtain financing through 1st Advantage Mortgage and can have the property inspected. This is very similar to buying a property from another owner, but instead it is owned by a bank. This is definitely our recommendation, as there are too many risks associated with not seeing a home or not having the property inspected or appraised.
Keep in mind that people who lost their home in foreclosure very likely couldn’t afford to maintain their property. Be prepared to pay for any problems such as plumbing or electrical repairs, leaky roofs, or even a poorly kept interior or exterior that will need the care that the previous homeowner didn’t or couldn’t provide. Remember to budget carefully, and make sure you have the money needed for what could amount to extensive and costly repairs.
Though there are some risks and probably some added costs to purchasing a foreclosed property, there are many homes out there that are in great shape and have just become the product of economic hardship among their previous owner. If you find a home that is worth the effort, contact your 1st Advantage Mortgage loan officer to take advantage of a golden opportunity. •