The number of foreclosed homes on the market is quite staggering and the figure is only going to rise with more of fancy adjustable loans coming in. This impending crisis however provides an ideal opportunity for those buyers looking to make a killing in real estate shopping and getting a foothold into city neighborhoods they wouldn’t have been able to afford otherwise.
Foreclosure sales are very similar to traditional sales except that the buyer here has no prior information on the condition of the property he is going to put down his hard-earned money on. So basically, it’s a gamble that could go either way! Buying foreclosed homes at auctions can be the cheapest but could go either way as these could come with liens against taxes, etc, which could cost you a lot in the long run and eat away into your bargain. In such a case, buying from banks presents a safer bet as they are obliged to clear off any debts before selling the foreclosed property.
The buyer however has to be very careful when purchasing a foreclosed home as there are many pitfalls involved that could land the buyer in a quagmire. Since banks are the sellers, they seldom bother with any fix-up jobs and the homes are sold in ‘as is’ condition. The biggest drawback to foreclosed homes is that there are no disclosures from the owner about any potential issues with the property or its surroundings. The buyer is then stuck with whatever repairs are in his karma and there is no one around to blame! So the buyer needs to order an inspection done at the earliest to enable closing the deal on time. Another important perspective would be to chat up the neighbors to get a better idea of what he will be up against. Also the time-frame for getting home inspections or loan appraisals is significantly short, which basically translates into your being ready to put 100% cash down within a week’s period as compared to 17 days in a normal transaction. So a smart move would be to get a pre-qualified home loan so you can move in quickly on your buy.
A conservative cost of your home buying should include the basic value of the property along with the cost of any repair works needed as well as cost of enhancements to bring it up to your standards. If the added-up value is still lower than the market value, you are onto a winner! You foreclosed home will then obviously make a savvy investment and with the right homework, you are going to be buying yourself a diamond in the rough!