Is Buying a Foreclosure Really That Different?
No matter your reasoning for looking into the foreclosure market, foreclosed homes can be very appealing. Foreclosed properties are a great opportunity for people to be able to buy into a neighborhood that may be out of their price range. However, when acquiring a foreclosed property at auction it is important to be savvy. Foreclosed properties, while often a great deal, can turn into a nightmare if the buyer hasn’t done some research before purchasing the home. Here at Investors At Auction, we are foreclosure auction experts that want to help you navigate the murky waters of the foreclosure auction process so that you can make an informed decision when purchasing a property. In today’s post, we are going to go over a few things that you need to keep in mind when purchasing a foreclosed home through auction and ways that you can make sure you are getting the best deal possible. Continue reading below to learn more.
Know the Different Foreclosure Property Types
Often, people will ask if all foreclosure properties are the same. While the simplest answer is a resounding no, we feel that it is important that all of our current and potential customers understand the different types of foreclosure properties. Below, we have listed the three main types of properties that individuals will find in the foreclosure market.
- Pre-foreclosure: Pre-foreclosure or short sale homes are properties that are still controlled by the homeowner. In these cases, the homeowner is typically unable to pay the necessary mortgage payments on their home and have come to an agreement with their lender to sell the home below market value to try and unload the property. Potential buyers can make an offer to purchase the property, however, the lender has to agree with the price before anything is finalized.
- Auction: If a home doesn’t sell during the pre-foreclosure phase, or if it never went through the phase at all, it will be put up for auction. Foreclosure auctions are typically held by a neutral third party such as a sheriff or trustee and the lender on the property has much less control over the final selling price. The majority of foreclosure auctions are cash only affairs, making it very important for the buyer to be as certain as they can be that the property they are bidding on is in good enough repair to be worth the investment. Additionally, it is important to make sure there are no liens or encumbrances on the home that might become an issue later.
- Real Estate Owned: If after a foreclosure auction a home has still not sold, it will move into the full possession of the lender and technically become owned by them. While real estate owned homes are the most popular method of buying foreclosed homes, this method of purchasing can offer the least value and the most competition. Because lenders are typically looking to unload the property as soon as possible, they will price the home to reflect the market value of the property, leaving buyers much less room to negotiate.
Join us again next time as we go over some pro tips that will assist you in your foreclosure auction journey. At Investors At Auction, we want to make the foreclosure auction process as hassle free as possible and we promise to work with you every step of the way to achieve this goal. Visit our website today to learn more.