First-time home buyers will inevitably be told about the wonderful benefits of buying a foreclosed home. While there are plenty of good reasons to buy a foreclosed property, there are also some unsavory aspects of these kinds of transactions that every home buyer should be aware of. If you are comfortable with the idea of buying a foreclosed property, then you could find a great deal on the home of your dreams.
The Price is Right
As you would expect, a foreclosed home is going to sell at below retail price to try and help the bank recoup as much of its losses as possible. If you find a good deal, then you can buy a very expensive home for what would amount to be pennies on the dollar.
Most Foreclosed Homes are in Bad Areas
Most foreclosed homes are on the market because they are in low-income neighborhoods where residents traditionally have problems paying their mortgage payments. It is absolutely possible to find a foreclosed home in an upscale neighborhood, but you are more likely to find foreclosed homes in areas in decline.
Great for Handy People
People with the necessary skills to fix up homes often look at foreclosures as gifts. Most foreclosures are brought to market because the previous owner could not pay the mortgage, which means a little fixing up is all they need. But for the really great foreclosure bargains, you should look at homes that have been abandoned for a while. Those homes usually need a lot of work, but they are also great bargains.
Banks are Hard to Negotiate With
A bank would rather wait for the right buyer to come along than negotiate with an individual to get a property sold. The bank might put a few thousands dollars into the property to sell it faster, and the bank will want to make that money back when the property does sell. Banks have very strict guidelines they use to negotiate on foreclosed properties, and you will find that negotiating with a bank is much more difficult than negotiating with a person.
The Auction Process is Risky
Most banks auction off foreclosed properties in as-is condition without giving buyers the chance to look around the inside of the home. If the home has been sitting for some time, there could be problems with mold, pests, or a cracked foundation. If you can get the auction address before the auction happens then you can try to look the property over before you bid, but foreclosure auctions are some of the riskiest transactions in the real estate industry.
The idea of buying a dream home at a discount because it was a foreclosure is a common one. The problem is that it takes experience to successfully navigate the foreclosure sales process, and it takes a lot of patience as well.
If you take the time to learn how buying a foreclosure occurs and you get the necessary resources you need to bring the transaction together, then you could be buying your dream home and significant discount. If you get involved in a foreclosure transaction you don’t understand, then you could be on your way to losing thousands of dollars.