Almost everywhere you look, there are foreclosed homes. Although there aren’t as many as there were during the recession of 2008, there are still many of these properties available for purchase. But how do you buy a foreclosed home? Is it a special process or can you simply put in a bid and get the house? Let’s take a look at buying a foreclosed home and how it is different from buying a traditional property.
What is a Foreclosed Home?
Foreclosed homes, also known as a bank-owned or real estate owned (REO) homes, are known for the potential deal buyers can come across. These properties are generally sold before below market value, allowing buyers to get a great price on a property. Foreclosed homes often sell an average of 7.7 percent below fair market value. These homes often do not come with appliances and do need to be fixed up before you move in but because they are less expensive than a conventional purchase, you may be able to borrow money to fix up the home.
Two Ways to Buy
Many foreclosed homes are either bought through an auction and a conventional real estate listing. Once the bank takes possession of a property, many listings go into a “public foreclosure auction,” where a bank attempts to sell the property to the highest bidder. Auctions do move quickly and buyers may or may not be able to inspect the property before the bidding so there is some risk involved in an auction. Many auctions require buyers to show up with cash or certified check for the amount. If the property doesn’t sell at auction, it is listed on conventional real estate websites like Zillow where buyers can shop and place offers.
Things to Keep in Mind
There are a few things you need to know before buying a foreclosed home. The first thing you should know is that once you make an offer on a foreclosed home, you should be prepared for the process to take longer than a traditional sale. Unlike a traditional sale, you are not negotiating with an eager seller, you are deal with a bank, many of whom have a multiple layer approval process your offer will have to pass through. You should also know that inspections are extremely important for a foreclosed home, particularly for a home that has been vacant for a while. Many foreclosed homes have hidden problems like mold or broken plumbing. You should also be prepared to spend a lot of money on home repairs. Many former owners neglect their property when they find out they are facing foreclosure. Some even intentionally damage the home when they move out. Foreclosed homes are more likely to run into title problems like liens on the property, which can delay the process.
Foreclosed homes may be an option for some but it is important to know what you are getting into before bidding on a property. For more information on buying a foreclosed home, call Simply Referable today!
How to Buy a Foreclosed Home with Simply Referable
Together, with your Simply Referable team, you’ll cut the right deal for the right price with qualified guidance every step of the way. Every team member is committed to selling your home and forming a lasting bond with your family. Thanks to our roots in the Maryland/DC region, we can help you find your dream home. Contact us online and give us a call at 410-983-9045. To see some of the stunning homes we work with, follow Simply Referable on Facebook, Twitter, Google+, Pinterest, YouTube, and LinkedIn.