Authored by Wordsmith in Real Estate
Published on 04-02-2009
Real estate agents often find themselves saddled with requests from prospective home buyers that they would like to begin their search for homes that are foreclosed properties and those owned by banks. This is due to the common perception that these are cheaper than others and are available at rates lower than their market price. However, this may not always be true. Their prices vary according to their location and many a time they are valued at prices higher than the market rate in order to cover transaction costs and other expenses incurred on the property.
Buying a foreclosed home is also not the easiest of jobs. It requires a lot of groundwork and even luck plays a role in clinching the deal. An auctioned foreclosed home entails cash payments along with long waiting periods to actually get possession of the home. Moving in could be even later as they may require extensive repairs. It is not unusual to find such a home vandalized by occupants who were forced to leave when the home was foreclosed.
The foreclosed homes are difficult to investigate as clear details are often missing. Any judgments against or liens attached to the homes may never be found out. The risks involved in such deals can put off even the strongest of buyers. The prospect of losing a substantial amount of money is not acceptable to anyone.
If a foreclosed home is acceptable, it is preferable to go through a real estate agent who has experience and has information about such properties. He may also be able to help in assessing the real value of the home in question. The buyer of course has to keep in mind the cost of repairs he will have to complete before moving in. Cash also has to be collected for large transactions, as other methods of payment are not accepted for foreclosed homes. Laws governing foreclosures vary from state to state, and a listing service provides state wise information about these laws. One such online service is ForeclosurePoint.com. This will reveal whether payments must go through the court, what taxes have to be included and how much must be paid in cash to start with.
Foreclosure purchases neither entitle one to title insurances in the first instance, nor any title warranties that are customary in regular property transactions. Titles have to be extensively perused at the expense of hundreds of dollars for title searches and finding any debts that are unpaid. Problems can be faced if issues relating to the title are not documented or do not appear till the public sale takes place.
Ways of Buying
A foreclosed property can be bought in three different ways. Firstly, it can be bought in a pre-sale when the property can be purchased before the lender forecloses it. This is done with negotiations between homeowners and buyers before the foreclosure takes place. A public auction of foreclosed homes has become a very popular way to pick up such properties. Finally foreclosed homes can be bought directly from the bank.