If you’re looking for a great deal and don’t mind the possibility of getting your own hands dirty in the process, you may want to consider purchasing a foreclosure.
A foreclosure occurs when a borrower defaults on their mortgage for an extended period of time. The lender then has the right and option to either foreclose the home or assume the rights of occupancy for the property, resulting in lenders being more open to letting the properties go cheaply. However, it’s important to keep in mind that many of these homes need a lot of work, so the money you save on the sale price will most likely go into updating or repairing the space.
If this is something that interests you, let your agent know you’re interested in seeing recently foreclosed homes.
Here are a few things to keep in mind if you’re considering a foreclosure as your future home.
Before It Happens. Many lenders publish a list of homes approaching foreclosure so prospective buyers and their agents can approach the owner before it actually happens. By going this route, you could save anywhere from 25 – 30 percent of market value. Since a foreclosure will ruin someone’s credit report, many sellers are open to a quick sale.
REO Sales. A real estate-owned sale occurs when the lender decides to sell a foreclosed property directly. While the savings aren’t as great, buyers are able to finance the purchase, a process that generally occurs in the same way a traditional home purchase would.
Expect the Worst. Lenders don’t want to add to their collection of homes, and they aren’t going to make significant investments in sprucing up the space, so be prepared to make a lot of upgrades and fixes once the home is yours. You may find that many things, including electrical, plumbing and HVAC systems, need to be brought up to code to make the home livable.
If you’re thinking of purchasing a foreclosure, be sure to keep an open mind and research to avoid jumping into a situation that may not be best for you.
To learn more about the opportunities foreclosures provide, contact me today.