Advantages and Process Of Buying a Foreclosed Home
In June there were 107,194 U.S. properties filed for foreclosure, according to RealtyTrac’s Midyear 2014 U.S. Foreclosure Market Report. The month marked the lowest amount of foreclosure activity since the housing bubble burst in August 2006. The decrease in foreclosures is positive for our economy. However, foreclosed properties will always exist. Here are points to consider on why many make an investment in a foreclosed home:
- In general, many are attracted to foreclosures because they can cost less than a traditional property. This was especially true prior to the Great Recession.
- There are different levels of foreclosure, and each comes with their own benefits and challenges. For instance, the property could be in pre-foreclosure, auction or post-foreclosure (also known as “bank-owned” or “REO” — real estate owned).
- Discuss with your agent what is available in your area, and which type of foreclosed property would work best for your situation.
- What is your situation? As mentioned above, maybe you’re buying a home for yourself and are attracted to the lower price. Or maybe you’re purchasing an investment property to rent out. Or you could be looking to flip a property so you can make an immediate profit.
- No matter your reasoning behind seeking a foreclosure, you may be eligible for a home loan.
- Connect with your agent on how much you should and can offer. In many cases, you could be competing against cash offers from developers.
- Seek an REO home if you can. You’ll have a better chance at being able to view and inspect the home before purchasing. You also won’t have to worry about liens or back taxes.
Disadvantages Of Buying a Foreclosed Home
We’ve covered the good, but what about the bad of purchasing a foreclosure?
- To have a smoother experience, hire a real estate agent specialized in foreclosures. They have an ear to the ground when it comes to opportunities. The agent will also have a sharper understanding of state foreclosure laws.
- Especially with bank owned properties, they can take a long time to settle. RealtyTrac reported: “U.S. properties foreclosed in the second quarter of 2014 were in the foreclosure process an average of 577 days from the initial public foreclosure notice to the completed foreclosure.” Clearly a foreclosed home is not a good idea if you’re trying to balance selling your home and buying a new one. For instance, what happens if you sell, but haven’t landed a foreclosed home yet? Cover all potential scenarios with your agent to receive expert advice relevant to your situation.
- Leave the dreams for dreamers if the property is in auction. You won’t be able to do a walk through prior to placing a bid. Many homeowners experience mid-life senioritis when in foreclosure. They stop caring. The property is no longer there’s, so they don’t feel the need to invest in repairs or general upkeep. Therefore it is smart to set aside some budget for home improvement costs.
- Oh, and we can’t forget a favorite of all parties: the paperwork. Expect a lot of it.
Whether you’re looking to make a short- or long-term investment, First Option can assist you with obtaining a foreclosed home. Fill out our Fast Response form, or give us a call at 855-300-4342. We look forward to hearing from you!