If you have limited funds for buying a property and want to purchase below market value, you may consider buying a foreclosed property.
What is the difference between a foreclosed property and a regular one on the market? How can buyers find and inspect the foreclosed property, and ultimately make a purchase? Let Spacious explain it in detail.
What is a foreclosed home?
A foreclosed home is one that a homeowner has to give back to their lender because they can no longer afford to make their mortgage payments. The house may then be put on the market by the bank or loan company at a significantly lower asking price. This is usually because banks and loan companies are looking to recover their loan, so they want to sell the home as quickly as possible.
Advantages of Buying a Foreclosed Property
Usually cheaper than average market value
These properties are usually cheaper than the average value of properties on the market. This means that you could save hundreds if not thousands of dollars on the property itself.
Property is ready for occupancy once paid
Once the deal has been sealed, you can immediately move in without waiting for the property to be vacated.
Open for customization
Since these properties are often in bad conditions or unmaintained, they will mostly be open for customization based on your liking. With the extra cash that you will be saving from this deal. You will be able to buy a property and have it customized base on your preference as well while spending a total amount that may equate to an average house on the market or even lesser.
People are informed of auction deats
When lenders are aiming for auctions, they inform people earlier and that can be an opportunity for you to research about the property and its previous owners. You might even be allowed to do an inspection beforehand and that can be a good thing because you can check if there are a lot of problems inside. That way, you would know how much repairs will cost you in the future and you would also know at what amount to stop when bidding happens.
Things to keep in mind before buying a foreclosed property
1.Inspect the property beforehand
Inspecting the property beforehand should really be on your mind because it will also help you determine if the property is worth it or not. When inspecting, you need to look at every nook and cranny that the property has because although you are expecting it to be unmaintained, in a bad condition or nasty, you might get worse than what you expected. Inspecting the property to know how much repairs and modifications would cost you in the future will also be a strategic move to know at what price should you stop bidding.
2. Consider hiring a real estate agent who specializes in foreclosures
You don't necessarily need a real estate agent in order to buy a foreclosure, but they can provide expert advice on foreclosures in your search area. They can also help you assess whether a foreclosed home's asking price is worth the potential risks involved, such as budget issues or repairs.
If you know you don't want to hire a real estate agent, start by searching for foreclosed homes online. You can also drive through neighborhoods to see if there are any homes for sale labeled "Foreclosure Property." Make sure you research what other homes, both foreclosed and non-foreclosed, in the area sell for so you can see whether the property you're interested in falls above or below that level.
Where do you find houses in foreclosure for sale?
1. Government agencies
Government agency websites like HUD.gov, Opens overlay provide prospective home buyers with foreclosure listings in their area.
2. Auctions
Auctions also offer prospective home buyers the chance to bid on foreclosed properties. Do an online search to see what auction houses or events are in the area you're looking to buy. You can also search government websites for resources about where to find government auctions on foreclosed properties.
3. Bank websites
Some banks offer a search feature on their site where you can look for foreclosed properties sold by them or through loan companies. You can usually search by state or city to help narrow your results.
