Read This Before Buying a Foreclosed Home
(RepublicanDaily.org) – Foreclosure occurs when a bank repossesses the home of a borrower who couldn’t keep up with their mortgage repayments. Of course, lenders have no practical use for the properties themselves; they just want to sell them again to recoup the money they’re missing out on. Banks will try to get as much money as they can for the homes, but if they need to get the properties off their books quickly, they might be willing to sell at a discount on the market value.
Finding Foreclosed Homes
You can find foreclosed listings on normal real-estate websites, as well as dedicated forums for foreclosed properties, such as Fannie Mae’s HomePath website. It’s up to a given bank to decide how they want to sell their repossessed properties, and many simply decide to offload them using a real estate agent.
You should also be aware that there are different stages of foreclosure, and that the stage a given property is at will dictate where you’re likely to come across it. For instance, at the pre-foreclosure stage, the home’s original owners still technically own the house and have the opportunity to sell it themselves before their lender auctions it off.
Why Foreclosed Homes Cost Less
Homes in the early stages of foreclosure are usually cheaper than other similar properties because their owners are short on time. If you’re in default on your mortgage, you don’t have time to wait for the perfect offer on your home.
In later stages of the process, properties still tend to be cheap because banks don’t want to waste resources operating as property dealers. Lenders will generally listen to reasonable offers for the sake of convenience.
Are There Any Risks?
While there are often great deals on foreclosed homes, there are certain pitfalls you’ll need to avoid. One major example is wear and tear on the property; homeowners who go through foreclosure typically do so after a period of financial hardship, meaning they may not have had the resources to carry out necessary maintenance and repairs. Procedural difficulties are another common issue. Foreclosure can involve a lot of paperwork, which can delay you getting the keys to your new home.
Foreclosure became much more common during the mortgage crisis of 2007-2009. It’s rarer these days, but you can still find homes that go on the market in this way, especially since the COVID-related moratorium on foreclosures ended in July of last year. If you approach the situation sensibly, foreclosed homes can offer you great options in your property hunt.
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