Authored by Kate Beswick in Real Estate
Published on 07-15-2009
There aren’t many benefits to a downturn in the economy like the U.S. has seen over the past year unless you are considering buying a home. A plummeting real estate market is one of the first signs that the economy is in trouble. Homes become available for super cheap because there are so few homebuyers. And the amount of foreclosures skyrockets, giving homebuyers an even wider array of choices. And with foreclosures, the choices can come cheap! Foreclosures occur when homeowners can no longer make the payments on their mortgage. When they become seriously defaulted, the homeowner loses their home because the bank, or financial institution that gave them their mortgage, takes the home back in exchange for missed and future payments.
However, lending institutions don’t necessarily want the home back. They simply want back the money that they lent for it. Because of this, foreclosed homes are offered at very low prices to the right buyer. But buying a foreclosed home isn’t like buying a home that’s simply found on MLS or another type of listing service. There are certain regulations and requirements that are placed on these homes. These regulations are different from state to state so the first thing you must do if you’re interested in buying a foreclosed home is to check with your state to find out what first must be done and what the laws say about these homes.
Once you have checked with your state’s laws and find out you can proceed with buying a foreclosed home, the next thing you need to do is hire a real estate agent. Some real estate agents specialize in selling foreclosed homes and have knowledge that can help you as you walk through the process. In addition to their knowledge and expertise, many lending institutions will not sell a foreclosed home to homebuyers that are not represented by a real estate agent and so having one by your side becomes even more valuable.
Your real estate agent will be able to point you to real estate magazines, newspapers, and public records that list where foreclosed properties are. Find a few properties that you like and have your real estate agent inspect them along with you. You and your agent will be able to look at the properties to determine if there are a lot of repairs or maintenance that need to be done. If there are, a foreclosed home may not be your best option because the money you saved buying it will be spent fixing it. By having your real estate agent there with you, you can also ask them to compare prices on the foreclosed home with other homes in the area. This will let you know if you really are getting a fair price and it won’t leave you depending on the word ‘foreclosure’ to show that you’re getting a bargain!
Once you find a foreclosed home that you like, make sure that the property has no liens on it. These liens could be transferred to you upon purchasing the home. This will not only counteract the good deal you got on the home, but it could also make you responsible for debts that were never yours in the first place. Unpaid property taxes are one of the most common liens that are placed on a home that could become yours when you purchase it.
Buying a foreclosed home is a much more complicated process than just buying a home for sale by the owners. There’s a lot of paperwork and research that must be done. You want an expert along with you for the journey so you know what you’re getting and that someone else’s foreclosure doesn’t also become yours!