Homes in Foreclosure
There is a growing trend in the way first time home buyers grab a bargain – homes in foreclosure. Homes in foreclosure have steadily increased, year after year. Although this could have a detrimental effect on the property market in general, it offers first time home buyers the opportunity to purchase an affordable home.
However, this can also mean difficulty in locating homes in foreclosure since many mortgage buyers refuse to reveal that they are selling repossessed homes. This is because they want to be seen as friendly, not ‘the bad guy’.
The best way to locate homes in foreclosure is through your local realtor or mortgage lender. And even though the lender may not want it advertised, they do want to make money and will welcome your curiosity.
Keep in mind though, that homes in foreclosure are usually not in the best of shape either out of neglect or the former owner may have inflicted damage to the house and/or property before leaving as a form of revenge.
You should be sure to check out the location, neighborhood, etc. There may be a reason why the original owner lost the house. Perhaps they did try to sell but the house was too close to the airport, in a bad neighborhood, or something similar. All are important factors in deciding whether or not to purchase such a home either to reside in or to resell.
When buying homes in foreclosure at auction several things should be kept in mind. Besides being a good buy, which they certainly are, the purchasing process is totally different. When you bid on the repossessed home, you have legally committed yourself to a sale. A final bid acceptance becomes a contract and you cannot pull out. In the same turn, the vendor cannot pull out of the sale either. Thus, once your bid is accepted you must have the financing available to complete the transaction, usually within 30 days. You must also have a deposit ready the day of the sale and it is typically 10% of the total purchase price. So, if you are outbid, you must let it go if you cannot afford to pay more.
The best approach to a first time auction buyer is to go to one and simply watch and listen. Afterwards you can ask any questions you like.
In closing, before you bid on any homes in foreclosure, do the research. Talk to the realtor or mortgage lender and have them do a title search if possible; have an inspection done if possible; check for any special conditions of sale; and thoroughly view the property.