Those looking to save some serious money when buying a home can often turn to foreclosures in search of a steal.
While there is excellent potential for turning a profit when buying a home that has been foreclosed, there are a number of things to consider before committing to buy. Foreclosed homes will often come in an “as-is” state, which essentially means that you buy it how you see it. However, for budding renovations Kings and foreclosure homes Queens there can be great potential for considerable profit.
Understand what type of sale it is
Typically, there are two ways to buy foreclosed properties: from the lender or at auction. The first way is to purchase the home following the lender’s repossession of the property. These are generally sold on by real estate agents and the process is almost the same as a regular purchase.
The other type – to buy at public auction – is a little different. The lenders essentially auction the home off if the present occupiers cannot pay their mortgage repayments. What you can expect from auctions comes with more complications.
Be prepared for auctions
With purchases at auctions, you will need to overcome the competition in order to secure the home. Real estate investors tend to swarm on foreclosed homes, and usually have the cash required to fend off any other buyer. Unless you have the funds to pay for the property – in cash – you may find yourself with an uphill task.
You may not always get to see the interior
Before you buy, that is. This is especially the case with auctions, which means you may not really know what you are getting yourself into. Taking a gamble on a home is a lot easier when you have enough cash to splash out on repairs and overcoming interior damages. For the average buyer, you may not have enough money to pay for these repairs in order to bring the house up to an inhabitable state.
Bank-owned foreclosures
These can often be a better choice for many buyers. As mentioned above, these types of purchases tend to mimic how you would buy a regular home. They are listed by real estate agents and you can often simply make an offer against the property. The lending institution selling the home will also tend to bring the house up to a liveable state when selling in this manner.
The savings
The main reason why many opt for foreclosed homes is due to the potential to save a lot of money in the process. The typical bank-owned home offers incredible savings against “comp” homes sold at market rates.
Many buyers believe that the true value of buying a foreclosed home is found at public auctions, but this is certainly not the case. There is a chance that buyers can land themselves a property at a cut-price figure which commonly goes up to around 40% of similar properties in the area. Not bad at all.
Like with any property purchase, doing your research before committing to buy can often go a long way to seeing you land a super deal.
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