Let the Buyer Beware When It Comes to Foreclosures

If you are trying to save money when buying a home, now is a great time to explore foreclosures. The quantity of homeowners foreclosing on their homes has dramatically increased in the last few years, and while that is not generally a plus for the economy, it could be a great opportunity for you. Whether you want to buy your first home at a bargain, or are involved in the real estate market in some way already, getting to know a little more about foreclosures can always facilitate things.

Save Money with a Foreclosed Home

If your aim is to buy a property while keeping to your budget, it can be accomplished with a foreclosed property. Most foreclosed homes are sold at about 25 percent beneath their typical value on the market. However, saving money immediately may come at a price later on. Initially, you typically need to have the whole amount of the cost upfront at the home auction, usually in either cash or a cashier's check.

When you put in a bid at the auction, you also do not usually have admittance to the home, so you cannot see what you are getting. You might know the floor plan and what the exterior looks like, but you do not know what the interior is like, or what other problems the home has. For example, its previous owners could refuse to leave the home, forcing you to pay to take legal action. There could also be snags with the title, or liens on the home. There could be costly repairs to make that you can only see from the inside of the house. If you are the highest bidder, you might have to deal with such problems, so there is a risk.

Tips to Get the Most Out of a Foreclosure

If you are still attracted to buying a foreclosed home, it is prudent to gain from the experiences of other people when it comes to such a big decision. One of the safest ways to buy a foreclosed homes is to consider the history of the previous owner.

For instance, if the previous owner of the home bought the house with no money down, or has lived there for under two years, you will probably not save much money when you buy the house, even as a foreclosure. For the reason that there will not be much equity accrued yet. Try to only weigh homes previously owned by people who put at least 10 percent down and have lived there for at least a few years.

Generally, foreclosures are prudent for investors to explore, since they do not have to worry about small details that they may or may not like about the property, condition of schools in the area, or the attributes of the neighbors. Most professionals agree that if you intend to live in the house for a while, buying a foreclosure is uncertain. On the other hand, if you find a house that seems perfect for you, you have the money up front, and it just happens to be a foreclosure, there is the added bonus of saving some money while acquiring your dream home.