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So you’ve finally decided to buy your dream home, but you’re on a tight budget. She can still buy her dream home by buying a foreclosed home. Foreclosure is the legal process of recovering the loan balance from a borrower who has stopped making payments.

How to buy a repossessed house?

If you have decided to purchase a particular foreclosed property, talk to the owner and negotiate a deal with him. You can buy the property at a good price as the property owner will look to repay your loan amount.

You can also buy a repossessed property from the credit bureau that has taken over the property after a particular grace period. Banks auction repossessed properties in no time.

Do your homework before buying a property

Like most major purchases, you should do extensive research on the property. Understand how the entire foreclosure process works, and also attend a few foreclosure auctions to familiarize yourself with the process. Learn about the market value of the property and also about the history of the property.

Advantages

– Foreclosed homes come at a deep discount and you can buy a foreclosed home for around 25% less than market value.

– Since there are numerous projects coming up, the prices of foreclosure houses have decreased even more.

– As the house is already built, you can move in immediately.

– You can buy these houses with confidence without worrying about the legality of any of the documents, since they would have been verified by the bank.

– Most foreclosed homes are quality homes in good residential areas.

– Since you are buying a house from a government-recognized financial institution or from a bank, the seller can be trusted.

– You can complete the entire transaction in less than two months.

Disadvantages

– You get no collateral on foreclosed homes.

– Since you are buying the property as-is, you may need to do a lot of repairs and modifications. The previous homeowner may not have had money to make his loan payments on time, so he may not have had money to pay for repairs either.

– The bank will also not disclose any history of the property or the state of the house.

– The previous owner may have had other debts, such as property tax or maintenance fee, that you may have to pay if you want to buy the foreclosed home.

– Calculating the value of a foreclosed home can be a difficult task.

– You may also need to pay utility bills such as electricity bills and water bills.

– Banks may not offer you a loan for a home that is in foreclosure as there may be legal problems with the property.

– You may be required to pay the purchase price of the property in cash only. This can be a problem if you can’t get a loan from a bank.

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