There are a lot of people who consider buying homes that are in foreclosure because of the cheaper prices that generally come with them. If you are one of these people, you need to be careful. Jumping into the foreclosure market is not something you should do without preparation. There are many facts and pieces of information that you need to know before you buy a home in foreclosure.
Consult The Professionals
You might see an advert for a foreclosure auction and think this is a great way to buy a house for less than market value. However, before you look into this market you need to talk to the professionals. As a new foreclosure buyer, you should find an experienced real estate agent to help you. There are many agents that specialize in this market and will be well-versed in the complexities of foreclosure sales and purchases.
It is not only a foreclosure real estate agent in the Cincinnati real estate market that you need to talk to. You have to consult with a real estate attorney who understands how these sales work as well. The reason for this is the simple fact that foreclosure laws and regulations vary depending on the state and can be very tricky. You should not rely on the legal advice provided a real estate agent as they will generally not be lawyers who know the laws.
Auctions Are Not Always The Best Options
Foreclosure auctions are a great way to buy foreclosure properties for below market value, but they are not always the best option for you. If you are new to the market, it is recommended that you avoid the auctions because there are risks that catch even the experienced buyers. The primary issue with these auctions is that you will be buying blind.
When you bid on a house at the auction, you will generally be doing so based on the description of the house and maybe some pictures. You will not be given time to inspect the house for any damage or other issues. If the house has been vacant for a while there is generally damage that you will not know about.
Auctions also do not provide you with the time you need to find out if there are any senior liens on the property. Some of the senior liens that you could be faced with include outstanding tax owed on the property or other loans that have been taken out against the property. It is possible for a purchase at an auction to cost more than traditionally listed property when repairs and payments to creditors are taken into account.
The Current Owner May Still Live There
When you buy a foreclosed home, there is no guarantee that the current owner has left. If the current owner is still in the house, you are presented with 2 extra problems to deal with. You will need to evict the current owner and deal with any potential vandalism.
Evicting the current owner can actually be more work than you might imagine. It will also increase the amount you have to pay for the property as the evicting process is not free. There are also some current owners who will not leave the house without a fight and you will need to be prepared for this.
It is also not unheard of for the current owner to trash the house when they have to leave. You need to keep in mind that defaulting on the property may not have been something the current owner could avoid. This will bring intense feelings when they are faced with the loss of their home and these feelings can manifest in destructive tendencies TodayKos.
Look At Bank-Owned Foreclosures
Bank-owned foreclosures will not be as cheap as the auctions ones, but they can be a better option. They are also much easier to buy as you do not have to bid against other people and hope that you are getting a good deal. When a bank forecloses on the property and takes possession, they will have to pay off all the senior liens and evict the previous owner. The bank will also allow you to view the property before you decide to buy it which ensures that you know exactly what you are getting.
Bank-owned properties can also be bought via the real estate agent that the bank uses in a similar manner to traditional home listings. You will view the property and then you can put in an offer on the property. The agent will then present the offer to the bank and provide a counter-offer if the bank does not agree to the original offer.
Buying bank-owned foreclosures will still save you money. It is estimated that these houses will sell at 30 to 40% less than the market value of comparable properties. This means that you do not have to go through the stress of an auction to get the deal that you want.
Never Forego The Home Inspection
When you buy a foreclosed home, you need to have it inspected before your complete the sale. Bank-owned foreclosures come with a right for the buyer to have the home inspected by a professional before the sale is closed. You need to take advantage of this option because there are a lot of nasty surprises that could be waiting in the house.
Most foreclosed homes are in need of serious repairs and you need to know what they are. An inspection will highlight the trouble spots and you can then determine how much the repairs will cost. Once you have this information, you can decide if the house is still the bargain that you are looking for.
There are many facts that you need to know about buying foreclosed homes. It is important that you not do this on your own when you first buy these houses. Auctions should also be avoided by beginners as you are buying blind and will not be able to find out about any senior liens which are taken care of by the bank with bank-owned foreclosures.