Buying Foreclosures – In much of North America, the home market is a buyer’s market, which means that buyers have many homes to choose from at a price they can almost name, which bodes well for anyone looking to get a deal. The problem with buying foreclosures isn’t so much that they’re in disrepair but because:
1. Investors are fast.
Investors have a lot of money to spend and already have established relationships with banks and Realtors. As unfair as it seems, they often know about foreclosures before the rest of the home buyers do, which means that when there’s a foreclosure left, it’s either been deemed as a bad deal by investors or the bank has refused to negotiate on price. In either case, if you’re patient, you might be able to get a bargain, but you’ll probably be looking at a lot of effort on a small amount of movement.
2. Banks are slow
The problem with foreclosures is that banks seem content to sit on them and let them collect dust. And even when the bank is ready to move the home, there’s so much red tape that most buyers become tired of playing the game and moving on. If you are prepared to work on the bank’s schedule, buying a foreclosure might be a great way to get your hands on a deal, but you have to be patient.
When Buying Foreclosures Work
The best time to buy a foreclosure is right before the bank takes the home when the homeowner is entirely out of options and is looking for a knight in shining armor. Savvy buyers can snag houses like this at great deals without worrying about dealing with a bank. However, you’ll have to wade through dozens of homeowners before you find one with enough equity to make a sale easy.
Security Precautions
One final important note: when buying foreclosures, make sure you buy title insurance to protect yourself from an issue where the bank might not have a clear title. This is rare, but when dealing with auctioned homes, it happens more than you think. read
Also, ensure that a licensed inspector checks the home for problems. Most of the time, securing a loan on a house in disrepair will be impossible, which means you either need to repair it or pay cash. This is where home flippers make their money.
Are you shopping for homes and want to know how much you can afford to pay? Please look at our free mortgage calculator & quotes tool, which you can use to determine exactly how much home you can afford and how much to offer for that foreclosure property you’ve been eyeing. Our free mortgage quotes form will also show you how to get five free quotes from local lenders. You can use these to compare shops or to see where you stand with the lending market. It’s free, and it’s a great way to get your home-buying process started.
