Buying a foreclosed home can be a great deal. Since foreclosures occur when the owner of the home can no longer make mortgage payments, their lender takes over the home and tries to sell it to recoup their investment. Often times they are put on the market below value as the bank is highly motivated to get the home sold.
Typically bank-owned homes are not in very good condition. They likely haven’t been lived in or maintained well since the bank took ownership. Previous owners sometimes leave a great deal of things behind as they are moving out in a hurry and have no incentive to clean up the place. It is important to get a thorough inspection done so you know what you are getting into, but banks are typically happy to negotiate as they just want their money back.
You can also buy a foreclosed home at an auction before the bank takes possession to potentially avoid issues that come with a house being unoccupied for several months, though this comes with difficulties as well. Auctions are sight-unseen, so you won’t be able to tour the home and have an inspection done. Normally these auctions require cash purchases so you will need to have enough cash saved up to buy the home in full. Buying a home when it is bank-owned is typically easier and the transaction is much like that of purchasing a normal home.
If you have a goal of investing in real estate this year and are wondering about how to find foreclosures, here are some great websites to look at to get some property leads.
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