Buying a Foreclosed Home? Read This
(StraightNews.org) – It is not uncommon for those who are struggling financially to be unable to afford to keep up with their bills. When homeowners cannot afford to keep up with their mortgage payments, the lender may repossess the home. In this situation, the home is considered a foreclosed home and will be put up for auction. Lenders who have foreclosed on a home do not keep the property. Instead, they will attempt to resell it so that they can regain some of their lost funds. Banks will try to get back as much money as they can, but they will usually end up selling a foreclosed home far below the market value to get them off the books quickly.
Finding Foreclosed Homes
Finding a foreclosed home is surprisingly easy. Foreclosed listings are often placed on regular real-estate websites, as well as dedicated online forums for foreclosed properties. Fannie Mae’s HomePath website is one example of these forums. It is up to a lender to decide how they sell repossessed properties, and many will choose to sell them using real estate agents instead of selling the property themselves.
A property can go through different stages of foreclosure, and the stage the property is in can change where you may find it online. For example, if the home is in pre-foreclosure, the original homeowners still technically own the house and may be able to sell it before their lender takes possession.
Why Foreclosed Homes Cost Less
Homes that are in the early stages of foreclosure usually sell for less than similar properties. This is because their owners only have a short time to sell them before their lenders take position of them. Those who default on their mortgage don’t have time to wait for the perfect offer on their home. Instead, they will have to take the best available offer that comes within their time window.
In the later stages of this process, foreclosed properties also tend to be less expensive as banks and other lending services don’t want to waste their time or money operating as property dealers. Instead, lenders will generally accept reasonable offers on a foreclosed home for the sake of convenience.
Are There Risks?
There are often great deals on foreclosed homes; however, there are certain dangers you’ll need to look out for when purchasing one. A great example of this is wear and tear on the property, as homeowners who go through foreclosure typically do so due to an extended financial hardship. This means they likely do not have the resources to carry out necessary maintenance and repairs on their homes. This can add hidden costs to purchasing a foreclosed home, so it is essential to look at each property closely and even pay for an inspection to ensure that you will not have to pay more than the property is worth in repairs. There may also be procedural difficulties when buying a foreclosed home. Foreclosure often involves a lot of paperwork, all of which can significantly delay getting the keys to your new home.
Foreclosures became much more commonplace during the mortgage crisis of 2007-2009. While it’s rarer these days, you can still commonly find homes that go on the market, especially since the COVID-related moratorium on foreclosures ended in July of last year. Post-pandemic costs have continued to rise, and families who faced financial difficulties during the pandemic have likely not secured enough funding to catch up on their outstanding expenses. Buying a foreclosed home can come with some issues, but if you approach the situation sensibly and do your research, foreclosed homes can be a great purchase and an affordable way to purchase a new home.
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