Out of 139 million properties in the US, only 27,016 of them are foreclosed homes. Although they’re rare, buying one gives you more benefits than cons.
A foreclosure is when the owner sells their property to recover the balance of their loan. The homeowner can no longer afford to pay their mortgage, therefore selling their home.
What will a foreclosed home benefit you? Read on to learn the buying process and the benefits of a foreclosed home.
Table of Contents
Foreclosed Home Buying Process
Start by looking for a foreclosed home through three options:
- Short sale
- A bank
Once you find one that you fancy, hire a real estate agent to guide you through the home buying process. They can help you search for the best foreclosure that fits your budget and get you an offer.
Unless you buy at an auction, you’re going to have to get a mortgage. You’ll need a preapproval loan. Once you get a mortgage preapproval, you also need an inspection and appraisal.
After that, you have an overall view of the home’s situation and needed repairs. You can learn more about this here.
Benefits of Buying a Foreclosure
Never thought of buying a foreclosed home? Here are a few benefits to buying a foreclosure that may change your mind as first-time homeowners.
Get Your Home for a Lower Price
The price of a foreclosed home is cheaper compared to other types of homes. Most sellers price their foreclosure below the average market value. They do so to allow a quick sale or make a profit to get some or all of their money back.
Increased Bargaining Power
If a seller is greatly motivated to get a fast sale for the house, you can get a better deal. It’s easier to negotiate with the seller to lower the price, especially if the house needs some repairs.
The same can happen if the bank holds the foreclosure home. Financial institutions want to rid themselves of foreclosure as soon as possible with reasonable prices. So, if the bank holds the property for a long time, the easier it’ll be to negotiate for lower offers.
Early Due Diligences
Buying a foreclosure from a bank allows you to make a decision with as much time as you need. Don’t worry too much about having a coordinated and planned process.
We encourage you to do your inspections in the home before finalizing your decision. The more you investigate the condition of the house, the easier it’ll be for you to make a decision.
Possible Investment Opportunity
Foreclosed homes are a great investment opportunity if you’re starting an investment project. Rehabilitating the home allows you to increases the home’s value. This will allow you to gain immediate equity as long as you provide the best upgrades.
Finding a New Home? Go for a Foreclosure
Now that you know the general home buying process, it’s time to get a foreclosed home. You’ll get to save plenty, get more negotiating power, and plenty of time to decide.
Need to know more about foreclosure homes? Check out the rest of our guides for more helpful information.