Buying A Foreclosed Home
Posted on February 21, 2009
Filed Under Buy preforeclosure |
With the number of foreclosed homes on the market many homebuyers are focusing on them thinking they will get a great deal. While it is true, the homebuyer will probably save some money they should not expect to get bargain basement prices. Banks want to sell homes quickly; however, they know how much the homes are worth and they are not in the market to lose a lot of money.
Buyers who come close to the fair market value of the home will often get it; they will not get it for a steal though. Buying a foreclosed home will often result in additional waiting time as well as work. Banks work on their own time-frame and do not have the urgency to close a deal like most sellers will. A foreclosed home is bought as is and will not have the history available that a seller would be able to give you. This means you will buy the home and accept the flaws it may have; in many cases the former owner will have ceased taking care of it before the home went into foreclosure.
Most foreclosures are bought by investors that are willing to put in the work and effort involved in restoring the property and reselling it for a profit. They have the experience and finances to know what to look for and what to avoid; this is their business. This does not mean the first time buyer cannot buy a foreclosed home to save money, they may however; find a better deal and security by buying a home that is in pre-foreclosure.
The time between a home owner receiving a notice of default from the lender and the time the lender puts the property up for auction is considered pre-foreclosure. Purchasing a home at this time may result in the best bargains and allow you to consult with the owner about the home and the neighborhood. There is an art to it though and it may be difficult to catch it at the right time.
To begin with finding out about pre-foreclosures is the most difficult part and often is achieved by watching the paper for public notices or special websites. Then you will deal directly with the home owner who will often not be happy about losing their home; however, is often happier to sell it then let the bank have it.
Once you have an agreement with the owner you will have little time to complete the transaction before it goes to auction. Being prepared is the key, be sure you are ready to buy a home at this time, have an amount of money in savings for down payment and closing costs, be pre-approved by a lender; these steps will help expedite transactions.
It may be easier to buy a home conventionally but if you are up for the game and want to find savings on the home despite the risks buying a pre-foreclosed or foreclosed house may be for you. If you don’t end up with a money pit you just may end up with the house of your dreams!
Jennifer Stromsteen
http://www.articlesbase.com/real-estate-articles/buying-a-foreclosed-home-476805.html
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6 Responses to “Buying A Foreclosed Home”
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What is the catch to buying a foreclosed home? Are the foreclosure lists legit?
I am interested in buying a home. I have heard that foreclosed homes are sometimes sold below their market value. I have seen lists of foreclosed homes available on the internet. There is usually a fee just to see the list. I have also heard that a buyer is expected to pay all past due taxes on the property up front. What's the real deal, and is it worth the hassle?
The fee sites are a rip-off. Most of the time they're just copies of the HUD lists, which the government does not copyright. Look at them for free at http://www.hud.gov
Foreclosures can be a good deal though they normally sell for pretty close to market value most of the time. The slightly lower prices are usually due to less than perfect condition since the previous owner had no incentive to clean the place up or make needed repairs. Taking care of that will be up to the buyer.
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I don't know anything about the lists or the payment of taxes up front, but from what I have heard, many foreclosed homes are beat up and abused, and would need extensive repairs to make them up to par, which is why they are below market value. So you'd spend every penny you saved on the purchase price at Home Depot, plus the aggravation.
References :
No fee to see the list it is all public record. Different states have different laws in regards to taxes owed and other possible liens on the property. Most counties will actually auction the property off at the courthouse, You must be able to purchase the property at the auction so that means you have arrange this with your bank ahead of time. Regardless any investment like this is going to be a gamble, sometimes it pays off sometimes it doesn't. You can find some really good deals at the auctions but the mortgage company will purchase the house if it doesn't meet a minimum bid amount and then will resale the property using a Realtor. Also the property owner has up until the day of foreclosure to make arrangements and get their house out of foreclosure so just because its on the list doesn't mean its definitely going to be available…….good luck, there is a lot of competition out there in this market………
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did foreclosures for CHL
As "bostonian" says, the catch is the fee you pay for the list. You can get the same lists for free if you know where to look.
NOT true about the taxes. When the homes are sold, any money that is owed for taxes, or towards the unpaid mortgages is taken from the purchas price of the home. If there is STILL an unpaid balance on the debt, the original owner is still liable for it.
The new owner only assumes the financial responsibility ANY new owner of the property would assume.
References :
You can get free lists from sites like http://www.investingwithoutlosing.com and others. Just decide where you're going to invest (what county) and access the records at the court house. They are all public records.
References :
Investing Without Losing: The Beginner's Guide to Real Estate Tax Lien and Tax Deed Auctions [ISBN 0978834607]