Buying Foreclosures for Excellent Savings
Most savvy homebuyers know that buying foreclosures can be a great way to purchase a home at just a fraction of its market value. But beware! Those who jump into the foreclosure market without any additional information are liable to learn some very valuable lessons the hard way. Just like anything else in life, buying a foreclosed home has its pros and cons. They present wonderful, profitable investment opportunities, but they can just as easily become money pits if you don't know what you're doing.
Why Buy Foreclosures?
Why would you want to buy a foreclosed home? Here are just a few of the reasons that homeowners and investors are flocking to the foreclosure market.
- Low prices. Foreclosures sometimes sell for 30 to 50% below their true market values. More modest discounts of 5 to 10% are more common, but foreclosures are almost always priced lower than homes in the traditional real estate market.
- Great fixer upper homes. Many foreclosed homes are 'fixer upper homes' that need repairs, renovation, and tender loving care. By investing a little sweat equity, most homebuyers find that they can make significant profit by reselling the home after some relatively quick and minor repairs.
- Lower closing costs. The banks and government agencies that sell foreclosed homes are in a hurry, which means that they are often willing to accept lower offers on down payments, financing options, closing costs, and all the other miscellaneous costs associated with buying a home. Many sellers will come right out and offer buyers great deals and contract terms simply to sell the house quickly.
- No move-in delays. Most foreclosures are vacant, meaning that you can move in almost immediately after purchasing the home, without having to wait for the previous owners to move out.
- Flexible financing. When banks sell foreclosed properties, they're often willing to offer very flexible financing terms to sweeten the deal and sell the property more quickly.
- Profitability. Because foreclosures are so inexpensive, they're great options for resale, equity-building, renting, and other investment purposes. You can easily make a tidy profit, and quite possibly make your personal fortune by wisely investing in foreclosed properties.
The Learning Process: Buying Homes in Foreclosure
With so many advantages to buying foreclosed homes, why isn't everyone doing it? Because there are some important disadvantages to doing so. The disadvantages are manageable, but only if you're well aware of what you're getting into before making an offer on a foreclosed home.
- Liens and liabilities. Foreclosed properties may have liens from unpaid taxes or liabilities regarding the property title. These hassles can increase the paperwork burden and make the process of buying foreclosures more expensive. Fortunately, a little preemptive research and help you avoid these time wasters.
- Former homeowners. Sometimes the former owners of a foreclosed property are in denial and refuse to move out of the home. If you're the unlucky buyer, evicting them will be your responsibility. But again, doing research in advance and working with a professional real estate agent can obviate the situation.
- Property condition. Many foreclosed properties are in good condition in beautiful neighborhoods, but some are rundown and reflect the financial difficulties that the previous owners were facing. The latter require significant repairs and renovation, which is fine if you want a fixer upper, but it's not something you want to discover after purchase. Be sure to give the home a thorough inspection before buying it, so that you won't be unpleasantly surprised by leaky roofs and septic tanks after purchase.
- Different buying procedure. When buying a home in the foreclosure market, you'll find that you need to do more research and paperwork and exercise more caution than you would in a traditional real estate market, because foreclosed homes are sold as is, without any guarantees. But given the profit-making potential of these homes, the extra paperwork seems a small price to pay.
Clearly, understanding the pros and cons of foreclosures will be critical to your ability to make a profit and find the home of your dreams. ForeclosureDeals.com has experts on-hand 24/7 to answer your questions and address your concerns about buying a foreclosed home. Our foreclosure listings has more than 1.5 million foreclosed properties nationwide and it makes it easy to find the home you're looking for. But don't take our word for it. Sign up for your seven-day trial membership and see for yourself!
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