Buying
a foreclosure property can help you get your dream house at lower than the
market price. When a house is listed as a foreclosure property, it means that
owners are in big financial trouble, for a very long time. The owner is not
able to pay the mortgage any more, and any payment in the future is not possible.
In such cases, the lender takes a court order for foreclosure in order to get
the money back. First, there is pre foreclosure period; this is a time when the
borrower is warned about the possibility of foreclosure, if the mortgage is not
paid within the stipulated time. The time limit of the grace period is determined
by state laws. This pre foreclosure period is very beneficial for a customer
who is looking to buy foreclosed properties. You can approach the owner with a good
price for the house, which is good to your pocket and even helpful to the
owner.
When
the owner is not able to repay the debt to the bank, the owner is forced to
give up the property to the bank. These bank owned properties are open for
foreclosure sale at below market prices. As the sale is held by banks, they are
safe for new buyers looking for foreclosed properties. The main purpose of the
lender is to get back the money. Therefore, the lender might offer the buyer a
price which is less than the market price.
While
bidding for the house, the buyer must have the cash ready. If the buyer is
successful, the house is handed over at the same time, in its present condition.
If you are able to get a house in a foreclosure sale, that is also in a good
area, then it can be a very amazing investment. The owners who fail to repay
debt voluntarily give the house to the bank to cancel the loan. These banks hold
auctions in order to sell the house and get back their money. Therefore, it
will be beneficial for the buyer looking for foreclosure sales.
It
is true that the foreclosed property is cheaper than the market price, but
still you must study the market and do your homework. You must research the market
price of the house, the location of the house, and even the condition of the
house. You can get to know where the auction is being held. You can find it in
the local newspapers. You can approach real estate agents or the attorney and
notify them that you are interested in buying the foreclosure property.
After
the property goes into the foreclosure mode, the owners do not care about the
condition of the house. Therefore, you must know the present condition of the
house, and how much you need to spend on its renovation. You can go by yourself
or take an expert advisor with you to inspect the house. You must calculate the
market price of the house and the expenditure you will need to make on the
house. Because it might happen that you will end up spending more on the
repairs than is worthwhile.
A little
homework about the original market price of the house and the actual condition
of the house will help you to play it safe at foreclosure auctions. You will be
able to determine the price that will be profitable to you. After all, this
research will help you fix your price range and you must stick to it. You can
attend some foreclosure auctions to understand its working pattern and process.
You
must set practical expectations when buying any foreclosed property. If you
realize that the house requires more repair, then you can bargain more. You can
also look at how long the house was empty, because there will be more damage to
the house, the longer it has remained empty. You must check whether the house was
given pest treatment and there are no bugs and moths eating up the woodwork of
the house. These damages require huge expenditures to get them repaired.
There
is one more form of foreclosure sale, known as hidden foreclosure, which is
carried out for new and upscale houses. The auction for this is not advertised
openly and, therefore, has less exposure to possible buyers. Real estate agents
carry out the proceedings of such sale. Therefore, if you come across such
sale, you must inspect carefully for all the details and make a smart decision.
© Global Realty & Investment Corp
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