When a homebuyer cannot pay their mortgage, the loan goes into default and the lender can legally repossess the property in a process called foreclosure. After the repossession, the lender tries to sell the home, to recover as much of the loan’s value as possible. In the article below, we will discuss the benefits, disadvantages and difficulties of buying foreclosed homes.
The Benefits of Buying Foreclosed Homes
In most cases, UT Foreclosed Houses sell for less than similar homes not in foreclosure. Banks have no use for foreclosed homes, and they want to get rid of them quickly. Foreclosed properties are sold at auction, where lenders try to sell them as soon as possible.
The low prices offer buyers some compensation for the risk they take in buying a foreclosed home. When buying such a property, buyers typically have more room to negotiate, and can often get concessions like repair reimbursement or below-market mortgages.
The Risks of Buying Foreclosures
There are many risks involved in buying foreclosed homes, but the biggest is the condition of the property. Someone being forcibly evicted from a home isn’t motivated to keep it clean, and in some cases, tenants vandalize the property. Some lenders rehabilitate the homes before selling, but most do not. At some foreclosure auctions, buyers are not allowed to inspect the home before bidding, which makes a condition assessment difficult or impossible.
Buying foreclosed homes also carries the risk of legal issues. If the property owner is still occupying the residence, or the lender has not assumed title, there are legal risks. You could end up being forced to process the eviction, or you could be left to pay years of back taxes.
Difficulties Faced by Foreclosure Buyers
Additional challenges inherent in the foreclosure buying process include:
Buyers of foreclosed properties cannot afford to be choosy about home amenities and location.
Most foreclosed homes require some degree of rehabilitation to realize their full potential.
Buying Foreclosed Houses typically requires the buyer to hire a real estate attorney to assist in negotiation and risk mitigation.
Foreclosed properties aren’t listed in the same way as conventional homes for sale. To find foreclosures in your area, you will need to use a location service. Click here for more information.
