Purchasing a Foreclosed Property

by JasonAdams on December 3, 2012

  • Sumo

(US laws regarding foreclosed property) Over the past years, the real estate industry has seen its worse conditions. Several homeowners need to give up their homes to mortgage lenders. Foreclosure auctions have been very common and more people see it as a good opportunity for investments. After a period of peaks in real estate, at last, it is time to buy homes and invest your hard-earned money, which is sitting in banks, on your dream house.

But before you rush to seal the deeds, it is recommended to communicate with a foreclosure lawyer for advice. You can ask the lawyer for details of the property and for things to watch out for. Don’t forget, you are investing into a sizable nest that if things go south, you will certainly suffer immense setbacks. Here are some of the things you need to watch out when buying a foreclosed property:

Don’t Buy at Auctions

Well, when a property is foreclosed by a mortgage lender, they will post a notice of auction. This is the normal process of foreclosure. After a period of time, when the lender lifts the auction, the former owner of the property can repossess it by paying the asking price. In this case, if the former owner does not want to repossess the property, you can buy it. The good thing about buying on asking price and not a bid price is the opportunity to see the property, to inspect if fixtures and parts of the property to insure that they are great in shape. It is not wise to buy a property when you don’t know its current appraisal or market value. Please note, auction bids usually start with the mortgage loan balance plus interest, even if the property has a lower market value.

Beware of the Former Owner

Mortgage lenders will give a notice of vacating the property to the former owner. However, even if the former owner has not moved out, foreclosure auction still proceed. When you buy a property and the former owner is still residing in it, you will have a hard time evicting the family. Plus, it may be that the former owner vandalized or destroyed various components within the house.

Buy from the Bank

If you want to buy foreclosed properties, check if the property is owned by the bank. There are banks that do mortgage loans and they foreclose properties when owners default in paying. It is good to buy from banks to avoid back taxes and to be sure that the property is absolutely vacated.

Get Pre-Qualifications

If you have a sizable and secured financial capability, lenders will favor you than those who need loan approval. You can communicate with lenders for a pre-qualification. You will be given priority when a property is on sale.

Spend for Renovation

With foreclosure houses, don’t expect too much. It is good to allocate some amount of money for the renovation of the house. With the renovations, you can increase the market value or appraisal of the property.




Latest posts by JasonAdams (see all)

Previous post:

Next post: