Saving Money on Foreclosures

Apr 03, 2017Reading Time: 5 min

Foreclosure is a word that has many an emotional pull. For those looking down the barrel of a foreclosure of their home, this can bring about huge amounts of stress and pain. But, for the ones who are looking to save a little bit of money, it can sound off bells of excitement and savings. Foreclosures can be enticing and a great way to get the home of your dreams for little money, but when you’re working with any type of foreclosure, there can be issues that pop up and even the best looking sales can go awry. Working with a Realtor can help you steer clear of these instances; a Realtor will guide you through everything you will need to know regarding foreclosures, finding a home that’s right for you, your sanity, and your budget.

Looming Foreclosures. These type of foreclosures have not yet happened, but for sellers that are feeling the crushing pressure of knowing that they’re about to be foreclosed upon, it can mean great things for the buyer. The seller will be highly motivated, meaning that you, as the buyer, will be able to negotiate a price that you’re comfortable with. The seller will also be more inclined to do small repairs and fix-ups around the home to make it more appealing to buyers. The backside on looming foreclosures? The budget may not allow for much wiggle room; if their mortgage is too large and they owe too much on the property, then trying to get $20,000 or $50,000 under asking price isn’t going to fly.

Bank Foreclosure.  This type of foreclosure happens when the bank owns the home; the bank will put the property on the market at a fair price, enlisting a real estate agent to get it sold. However, unlike the previous foreclosure, the bank will not be able to fill out a seller’s disclosure, letting you know of everything that went wrong in the home and that has been fixed. A home inspection is a must as it’s always good to know what to expect with a home that you’re buying. Bank foreclosures can also take a lot longer than regular sales, as the offer must go through the proper channels and be approved by the bank; this can also affect the pricing. Although banks can accept a lower offer than asking, they don’t have the debt that the seller does motivating them to take what they can get to keep from being foreclosed upon. If they don’t sell through the conventional way, the bank will send the property off to an auction to get their owed upon money back. If you’re thinking of looking into bank foreclosures realtytrac.com is a great place to find foreclosures and foreclosure trends.

bank-owned-foreclosure

Auctions. Auctions are the way to the cheapest of homes, but unless you’re willing to hand out cash right away, this route may not be for you. They can be a source of an endorphin rush, so make sure you don’t fall down the trap of bidding on a home just because it’s a steal of a price. Once a home has not sold through a real estate agent, the bank will send it off to auction; auctions are paying off what the bank is still owed, meaning that you can get a great home (can anyone say walk-in closets and jetted tub?!) for much less than you would on the MLS. However, auctions come with drawbacks such as not being able to get an inspection done, having to pay cash that very day, and not being able to see inside the home. It can be nerve-racking to buy a home without seeing the inside, even to seasoned experts, but if you’re willing to take a risk, this route can pay off. If a home has great curb appeal, most likely, the inside will reflect that. Be prepared for any issues that may arise in the future and have a lawyer look into the title of the property and any issues that may be attached to the home. There are so many roadblocks that may go up when it’s too late; you don’t want to be paying any liens on your new property. You can search for local auctions, or head to auction.com to find out which homes will be heading to auction shortly.

Foreclosures can be a great way to save money on a property, but it may not always work out perfectly, so be prepared. Buying a foreclosure means you will have to have a flexible schedule, allowing you to move in right away, or to wait it out for the bank to approve of your purchase or on any issues that arise. Always do your research and get the title checked out, working closely with a lawyer and real estate agent to make sure you make the informed decision.