Foreclosure properties can be an attractive option if you’re looking to get a good deal on a home. But there are many factors to consider when buying a foreclosed home.
As you can imagine, foreclosure properties come with a different set of conditions than you would find with a typical resale home. You will want to make sure you have evaluated all of the pros and cons of going through the foreclosure purchase process. You will also want to make sure you are prepared with proper budgeting, an experienced real estate team, and the right frame of mind.
Pros of Foreclosure Properties
- As already mentioned, buying a foreclosed home provides the potential for a good deal. The foreclosing lender may be anxious to get the home off their books, so a discounted asking price is quite possible.
- Foreclosure properties come in a sizes and price ranges…and in every kind of neighborhood. You may be able to find an ideal home in just the location you’ve been looking for. If you are lucky, a foreclosed home may be in great condition and ready for immediate move-in.
- Most people consider a home purchase an investment. Whether buying a foreclosed home as a primary residence or as a rental property, you can experience a profit down the road if you buy below market rate. This is, of course, provided that the home appreciates based on upgrades you make and the market value at the time you decide to sell.
Cons of Foreclosure Properties
- Many foreclosed homes are not in the best shape. They may require considerable repairs to make them livable. This is likely due to the previous homeowner not having the funding for regular maintenance or the amount of time the home has been in a foreclosure state. If you are considering a foreclosed home that is in need of a major overhaul, you will have to also think about the time and money it will take to repair.
- There may be some financial burdens attached to the home that is in foreclosure. Such debt can include unpaid tax obligations, construction loans, or home equity lines of credit.
- Buying a foreclosed home can take longer than buying a typical resale home. There is extra paperwork involved and additional red tape. It is also possible that you will have to wait several weeks to hear back from the lender after making your initial offer.
- Lenders trying to sell a foreclosed property may want to unload quickly, but they may also be trying to get top dollar. Competition for foreclosed properties can be steep and another buyer who comes in with a better offer may steal the deal away from you.
While I would never discourage someone who wanted to pursue buying a foreclosure home, I would definitely encourage you to have your financial resources in order, be flexible, have patience, and expect any outcome.
If you are interested in learning more about foreclosure properties versus purchasing a new or resale home, contact me at Down Home Real Estate. I will be happy to answer your questions and help you make the best decision for you.