Some homebuyers are very interested in purchasing a foreclosed property because they think it represents a better deal. Others are wary because they fear the potential difficulties involved and the condition the home may be in. If you are thinking about buying a foreclosed home, you should know that there are no certainties. There may be difficulties, but you may also end up getting a really good deal.
To protect your interests when considering the purchase of a foreclosed property, you should learn as much as you can beforehand so that you can make an informed decision. Here are some of the potential disadvantages and advantages of buying a foreclosure.
A foreclosure occurs when a lender takes possession of the property because the mortgage holder could not keep up with the payments. You may find that it is more difficult to obtain financing for a distressed property such as a foreclosure. Therefore, you should discuss the purchase with your mortgage broker to ensure that you can obtain a loan.
You may also find that a foreclosure is in poor condition due to abuse or neglect. Sometimes the previous owner intentionally causes extensive damage to the home before leaving the premises. Even if there is no intentional damage, when a home has sat vacant for some time, it can fall into disrepair or attract vermin.
You may think that foreclosures consist entirely of small or run-down properties, but this is not true. People in all income brackets can have difficulty paying their bills, so you may find luxury homes among foreclosures as well as starter homes.
For many buyers, the main advantage of buying foreclosed properties is the cost. Owning a vacant property incurs costly expenses for lenders, who would prefer to sell the home quickly in an attempt to recoup their losses. Therefore, foreclosures are often available for well below market value. Be aware, however, that you may lose any savings if there are outstanding liens against the property.