Did you know that there were more than 214,000 active foreclosure cases in the United States of America in the year 2020? Finding the right home in the current housing market is difficult, especially when looking at house prices. Buying a foreclosed house is a great option for getting the perfect home with lower closing fees and overall costs.
There are a number of things that you need to know when buying a home that is foreclosed. These home sales aren’t the same as your typical home sale so you need to do your research and be prepared to go through the process of buying a foreclosed home.
The good news is that you’ve come to the right place to learn more about the things you should know before you move forward with buying a foreclosed house. Keep reading this article for more!
Two Ways of Buying a Foreclosed Home
There are two different routes that you can take when you decide that you’re set on buying a foreclosed home for yourself and your family. The first option is going through an auction by lenders. These happen when the lenders repossess the home from the original owners due to those previous owners becoming unable to pay their mortgage.
Once the lenders take control of these houses, they put them up for public auction where interested parties can make bids to purchase them. Attending these auctions is a great way to go about buying a home that was foreclosed. If you’re a professional real estate investor then this is the best way to get your hands on foreclosed homes at the best house prices.
There is another way that you should consider if you’re not a real estate investor but want to get a foreclosed home. You’ll need to purchase the property from the bank once they take control of it. These banks will often enlist the help of local real estate agents to help list and sell the homes.
You’d take the normal route for purchasing a home when you’re buying these foreclosed homes. It is an easy process to navigate if you’ve purchased a home in the past because it is an identical process. You can go to urbchicago.com to check out some of the best foreclosed homes in the Chicago area.
Buying From an Auction Is Difficult
If you decide to take your chances and try your hand at buying a foreclosed home at an auction then you need to know what you’re getting into. You’ll be going up against experienced professional real estate investors when making your bids. Odds are that these professionals have more capital to play with when making a purchase than you do.
If you plan on getting a foreclosed home through an auction then you’ll need to pay for the home in cash. Not many people have the cash on hand to make that large of a purchase. If you have $200,000 in cash lying around then you’ll have an easy time of it but most people will struggle to get the home that they want by purchasing at an auction.
Auctions Are Sight-Unseen
Another big dilemma that you’re going to encounter if you choose that you want to go about buying a home through an auction is that you won’t get to see it ahead of time. If you’re getting a house that is listed by a real estate agent then you can get a showing of that home and have it inspected before buying.
Buying a foreclosed home through an auction means that you won’t get to see the inside of the home. There could be extensive repairs that are needed that you won’t find out about until you’ve ponied up the cash. You could blow through your savings trying to fix everything that is wrong with the house since you didn’t get to see it before buying.
Buying From the Bank Is Easier
You might get a better deal when it comes to house prices by going through an auction, but it comes with a number of hassles. Buying from the bank is a much easier proposition because bank-owned foreclosed homes are listed on the market just like any other type of home.
The process is the same as if you were purchasing the house from the current owner. The bank takes possession of the home when the old owners fail to pay their mortgage. From there, the bank hires a real estate agent who lists the home for sale.
If you find the right house for your needs then you’ll make and submit an offer to the listing agent. The agent will take that offer and present it to the selling bank and come back with a counteroffer if the bank declines the initial one.
You’ll Still Save Money With Bank-Owned Foreclosed Homes
There is a misconception that the only way that buying a foreclosed home saves you money is if you go through an auction. Bank-owned homes still sell for more than 35 percent less than other types of homes sold on the open market. You’ll save a ton of money on closing fees and overall costs for the home.
You’ll Need a Home Inspection
Avoid skipping a home inspection at all costs when buying a foreclosed home from a bank. The home inspector will come and tour the home to look for anything that requires repairs or modification in order to abide by building codes in the area. If you buy from a bank then you’re legally entitled to inspect the home before closing on the deal.
You’ll never know what repairs are in store for you if you don’t tour the home with an inspector. You’ll regret skipping this step when buying a home.
Consider Buying a Foreclosed Home Today
Buying a foreclosed home is a much cheaper alternative to buying a home from a private seller on the open market. Try buying a home from a bank-owned foreclosure because you’ll save money while still getting a chance to inspect the property. You’ll get better house prices and save money on closing fees.
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