Purchasing a foreclosed property is an option for home buyers in the market for a new home. Foreclosed property is a home the attached land that was owned and the owner defaulted on their mortgage. Homeowners are given certain grace periods and when those time periods pass, the bank takes possession and the home owner loses the property to foreclosure. Many think that buying a foreclosed home is easy but the process can be quite stressful. Below is a simple guide as to how one can buy a foreclosed property.
When purchasing a foreclosed home, there are two common options: Real Estate Agent and Public Auction. A real estate option will be one that is openly on the market for anyone to purchase. A public option foreclosed home is one that must be bid upon for purchase. With an auction option, there is no leeway for negotiations and you may not be able to view the home before bidding.
Purchasing a typical home on the real estate market is generally a standard process that can take a few months to complete. A foreclosure can take a bit more time to finish up. The process of purchasing a foreclosed comes with several levels of approval that must be completed before the deal can be complete. The bank must approve the offer and if an investor owns the property, their approval is needed as well.
The pricing of a foreclosed home is usually lower than the appraisal value as the bank wants to move the property as quickly as possible to lose less money. If you are interested in a foreclosed property, it is best to submit a reasonable offer so your offer has a chance to be accepted and not lost to a better offer.
It is important to note that if you will need a financial loan for the purchase of such property, that you become approved before making an offer. Banks are more apt to accept your offer if they know that you are qualified for the amount in question. This process is simple. Visit the lender of your choice and give the financial and personal details needed to see if you qualify. The process takes a short time frame and qualification is usually good for 30 to 90 days.
Factors to Consider Before Purchase
There are many factors to be considered before purchasing a foreclosed property. The condition of the property may be unknown. The property may be sold as is and you may have to pay a great deal of money to get the property up to code. Be wary of repairs and maintenance issues that may occur and have the funds to cover such projects so you do not lose money in the deal. A home inspection is key to finding out what you may need to repair.
Be sure to have enough funds to cover any out of pocket expenses. This could include the appraisal, home inspection or earnest money. These expenses can pile up quickly so be sure to have some type of financial cushion before beginning the process.
Beginners really need to do their research before trying to purchase a foreclosed property. The process can be tricky and there are many aspects that must be considered to make a positive investment. Speak with someone who has handled a foreclosure before or seek financial counsel to be able to understand how the process works to prepare yourself for the situation of foreclosure property purchase.