Things You Need to Know Before Buying Bank Foreclosures

Foreclosure is a bitter situation for the person who bought a property but couldn’t make a payment for it. Imagine losing the home that you’ve already spent some money on, where you lived for some time and where you have created memories with your family. It is painful, right? However, it has to happen because lenders are protecting themselves too. Bank foreclosures and other foreclosures in general are not bad altogether, especially if you are on the other end of the pole, if you are the one looking for an affordable home to buy.

Bank foreclosures can be great deals for homebuyers

Photo Courtesy of Nick Bastian Tempe, AZ via Flickr

Should You Buy Bank Foreclosures?

Like buying any assets, purchasing bank foreclosures have pros and cons, so before signing on the dotted line, make sure that you know these.

One motivation why people turn to buying bank foreclosures is the cost. Normally, owners of homes who are close to being foreclosed are trying to recover at least some of the amount they have paid for and invested in the house. Therefore, they are aggressive sellers who really want to be able to sell the property that sometimes, they would agree to a really low price.

On the other hand, there are also problems in choosing bank foreclosed homes. One major issue usually is that the real condition of the property is not disclosed and cannot be easily determined. There are times that the bank or seller will tell you that the house is in mint condition, but once you have already paid for it, you would be surprised at how bad the property really is. This situation, although rampant, is something that you can avoid. Inspect the house or contact the previous owners if you can. Ask them how the house looked like when they left and check the property with someone who knows about houses.

Purchasing bank foreclosures are preferable than going through property auctions. It is advantageous because you can negotiate prices with the bank; you can even give counter offers repeatedly until you and the bank reach a settlement.

Tips on Negotiating Bank Foreclosures

Know the comfortable amount you can afford. This requires that you know your financial condition really well. The bank requires that you send a letter of intention first so that they can give you an approval letter, which will tell you that there is a property within the price range you asked. In this situation, you, the buyer, are the one who would ask for a house with the amount that you can afford.

Do the numbers. This is especially if you are buying a foreclosed home to buy as an investment property. Compute the rent, the expenses and taxes that you can get before you decide on what property you should be purchasing. If you are going to use the house as your abode, then you should look at the mortgage payments and the renovation expenses too.

Bank foreclosures are great deals that you can take advantage of. You can have a nice property at an affordable price, however, it pays to do your homework first before getting bank foreclosures, because lack of research can cost a whole lot of hard-earned money.

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