There are so many reasons to buy a foreclosure!
- You can save lots of money to spend on anything you want
- You can get a bigger, better home in a more desirable neighborhood than you could otherwise afford.
- Because you can buy below market value that means you have instant equity in your home without having to wait around for years or make improvements.
- You can turn around and sell it for a substantial profit right away and put even more money in your pocket.
There are lots more good reasons to buy foreclosed homes, but those are the biggies.
So How do You Buy Foreclosed Homes?
As a potential buyer there are several opportunities throughout the foreclosure process for you to buy a foreclosed property.
The first opportunity presents itself when the house is in pre-foreclosure and the homeowner still can sell the property on their own. This usually involves approaching the owner and offering to buy the property from them outright. There are several benefits both to the buyer and the seller in the scenario. The buyer has time to research the title and check out the property before buying. The seller has the chance to walk away from the deal with something in their pocket from any equity they have in the property and they also avoid getting a foreclosure listed on their credit report.
The next opportunity to buy foreclosed properties presents itself when the house is put up for auction. If the borrower does not reinstate the loan by paying the amount that is in default the home will be auctioned at the end of the pre-foreclosure period in a public auction. Typically at a public auction the winner is required to pay in cash at the auction and may not have time to research the condition of the property or the status of the title before the auction. On the upside, though, some of the best bargains are found at public auction. Another benefit is that you don't have to deal directly with the original borrower.
The third way to buy a foreclosure is directly from the bank. The bank can either take control of the property through an agreement with the original owner or at the public auction. They can then sell the property to recover the amount still owed on the original loan. The downside to buying from the bank is that you typically won't get as good of a bargain as if you buy either a pre-foreclosure or directly at the public auction. However, the bank will typically take care of clearing the title and perform any necessary maintenance on the property which can remove a lot of the headache that sometimes comes along with buying a foreclosure.