What’re foreclosure properties
Foreclosure properties refer to properties which were “foreclosed” or recovered by a bank, lender, government or institution because the borrower (homeowner) has stopped making payments.
In this case, foreclosure happens when the titular owner of the house was not able to maintain the periodic repayments required by the lender or the local government’s real estate tax. Such properties attract the attention of buyers due to the lower selling prices.
Some house hunters are drawn to buying foreclosed homes which are also referred to as Real Estate Owned (REO) property because most lenders want to get these properties off their books right away. Hence they put them up for a lower price in the hopes of getting multiple offers.
Advantages of Foreclosed Properties
Major potential for 203K loan
One common issue among foreclosed properties is that there is usually something wrong with its structural parts or general state. Buyers who opt to buy such “distressed” properties should become aware that there’s a huge chance that this house could qualify for a good rehabilitation loan package on top of their primary means of financing.
This can reduce a lot of stress in the circumstance that several major issues with the property arise because the buyers can potentially have the funds to cover these problems.
Accumulation of equity
Another thing that encourages a lot of buyers to pursue a foreclosed property is the equity it can accumulate from purchasing low. In most cases, it’s all just a matter of making some repairs and improvements while in some others, it’s all about being patient as the area continues to develop.
Either way or whatever the situation, buying anything that is under market value means putting yourself in a favorable position to come out on top once you’ve decided to sell the property.
Ready for occupancy
Although not applicable to all foreclosed properties, it is possible for some. In fact, you could chance upon a house that you expect to be poorly maintained with a number of issues and damages but rather turns out to be surprisingly nice, clean and decent.
If you chance upon such property, pursue it right away. It may not be flawless and brand new but there would always be a long line of potential buyers competing for it.
Lower mortgage payments
If you’re looking at the idea of financing the purchase of the property, you can expect payment terms that are easy on the pocket. Buying a property that is lower than your budget requirements can always guarantee you lower monthly mortgage payment; and for most buyers, this serves as reason enough to pursue a foreclosed property.
Where to find foreclosed properties
The most common sources for foreclosed properties are websites that offer MLS, banks and lending institutions, real estate agents and brokers, real estate websites, local newspaper ads and various circulars.