5 things you should know before buying a foreclosure!
Foreclosures are the one thing tons of people know the basics of, but don’t know the full story! These deals are super helpful and great in context but there are some things you should know and research before you go into it! Just as a reminder, we have been working with this kind of deals for a long time, so if you want to buy one, let us know and we will guide you through it!
First things first, what is a foreclosure? It’s a property owned by the bank, and it once belonged to a home owner who failed for whatever reason to pay the mortgage. So, you should also know that this kind of deals might be cheap but come with a lot of complications! Some have violations, liens, open permits and so on, and those will influence the amount of money you will be paying in the future after you have paid the house! Good news is, you can a 100% mitigate those payments and end up paying a ton less, and use that money up for your new décor!
Chances are that the bank doesn’t only have one property for sale as a foreclosure, and most of the times they will bulk sale a few of them, what does this mean? This means they will sell a few properties as a one package and sell it as a unit! But don’t worry, sometimes they do sell one listings, and usually when that happens they go with a Real Estate Agent who will help them market the deal, so if you want to buy only one property in foreclosure, they are your best ally!
There are several stages in which a foreclosure goes before it reaches the auction sale, like a short sale which is a grace period in which the owner negotiates with the lender to still pay the full amount but still have the house for sale, but sometimes those don’t work out, and the houses enter this auction stage in which the bank will put the house out, and a series of buyers will bid their prices, the one that goes higher gets the house! One thing tho, this is also means the house goes out for sale and it can be sold only to cash offers, which can limit the number of buyers! The good thing for the lender is the loan is going to be completely paid off and they can move on with their life!
A foreclosure can be a very stressful time for anyone, and most of the time opportunists will see this and try to get the short sale going for a very low price in order to get the deal fast, so if you are in this situation go with the help of an expert and trust what your lender will say as well as the bank! While yes, selling the house fast can get you out of this situation right away, it can also mean you won’t be paying off the full amount of the loan and still be in debt! So go with an agent who knows what they are doing and don’t get desperate!
REO or Real Estate Owned!
If the auction sale goes sideways and doesn’t work for the bank, the property then will move into full possession of the lender and become a Real Estate Owned property, and this means the lender will have the full power to put this deal in the market at the price they so want, which most of the time is full market value! This is one of the safest and easiest way to purchase a foreclosure property but it also is the one with the biggest competition! Best thing about this, is that the lender will clean up the house of any liens, which makes it one of the safest investments for this type of sales!
Hope you enjoyed this article and it was helpful when you want to go and purchase a foreclosure! Also, if you do want to go in with one, let us know and we will very gladly guide you through this process!