What You Need Know About Buying Foreclosed Homes

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By: alexatdanacohen
on 7th Mar,2012

Many times you may hear that buying foreclosures are beneficial with the skyrocketing rates of individuals going into foreclosure on their homes.
What You Need Know About Buying Foreclosed Homes

Many times you may hear that buying foreclosures are beneficial with the skyrocketing rates of individuals going into foreclosure on their homes. Someone who wants to purchase a home may save plenty of money by purchasing a home that has been taken by a lender or a bank. National figures estimate that the average foreclosure sells for below 25 percent fair market value. Before you decide to buy a home that is currently in foreclosure, you need to educate yourself on the process from those who have gone through the process or have experience in the field.

Depending on the bank contract, you might not be allowed to do an inspection on a foreclosed home before purchase. An inspection protects the buyer from problems that may not be visible such as issues with plumbing and septic work, the electrical system or a weakened foundation. The decision to buy would have to be based on a simple visual inspection and you may be subjected to expensive repairs in the future. A home that has been empty for a longer period of time may require a larger amount of repairs than one that has been recently vacated.

If the foreclosed home is still occupied when you purchase it, you may be responsible for removing them from the premises. In some cases, this involves going to court for eviction proceedings if they will not leave willingly.

The process for buying a foreclosure varies from state to state. Each state also offers the original owners a time period, known as the redemption period, which allows the original owner to get the property back within a certain length of time. It's necessary to educate yourself about the laws for your state before you enter into the process. Know that even if you obtain the foreclosure, for a small period of time, the original owner may regain the property.

Before you decide to place a bid on a foreclosure check with the lender you intend to go through to ensure that they will finance the purchase. It can create a hassle if you bid on a home and win the bid only to discover that you cannot secure financing from the bank for a mortgage.

As an investor deciding to purchase foreclosures you need to have current knowledge about the market in the area. Knowing the market value of the home allows you to determine whether you're getting a good deal on the purchase. Homes that were built before 1978 may contain lead paint that needs to be removed before you can reside in it because it is harmful to live in a home that contains it.

The neighborhood where you're buying the home also matters. This applies for new homes, homes for sale by owner and those in foreclosure. You want the crime levels to be low, schools to be good and the area to be in a location that makes it easy to get to work or school without commuting for hours every single day.

Foreclosures also require more paperwork than purchasing a traditional home since the process is more involved and requires jumping through more hoops. Your real estate agent can make it a simple process. Don't completely exclude foreclosures from your choice of potential homes to buy whether you're a first-time homebuyer or buying a home for investment purposes.

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