Three Ways to Buy a Foreclosed PropertyPosted by Robert Sabrkhani on Friday, April 20th, 2012 at 5:29pm.
Today's real estate market is flooded with foreclosed properties, and information suggests that there may be many more foreclosures to come in the next few months. So, for many buyers, foreclosed properties represent a way to get a really good deal on a new home.
Foreclosures can offer great value to home buyers, but they can come with hassles, delays and hidden costs. It's really important to work with a real estate professional whenever you're considering the purchase of a foreclosure.
There are three primary ways to purchase foreclosures. Here's a brief overview of how each works.
1. Presale- During a presale, you negotiate with the homeowners who are facing foreclosure. In some cases, the bank may have agreed to a short sale, which allows the homeowner to sell the property for less than he owes on it. If you're considering a home that is an approved short sale, it's likely that you'll get no discount off the current listing price. This listing price usually reflects the amount the bank has agreed to take. This can be a risky way to buy, because deals often fall through and title issues can be sticky.
2. Through Public Auction- Prior to the devastation of the housing market, this was the most common way to buy a foreclosure. There are some pitfalls with buying this way. The first is that you may not be able to tour the inside of the home before the auction. If you can't tour the inside, see if your real estate agent can at least get pictures. And, be sure to look at the home from the outside in person before the auction. Beware: scheduled auctions get postponed, and some banks may only take cash from buyers purchasing at auction.
3. REO Properties – When properties don't sell at auction, they become known as "real estate owned" properties. In today's market, this is one of the most popular ways to buy foreclosures. The bank is usually trying very aggressively to sell these properties through agents. It is often easier to get a traditional mortgage on properties like these, especially if the bank has been holding onto them for a while. In fact, the bank may be willing to offer the new buyer excellent financing terms, including low interest rates and low down payments to get the buyer in the home with one of their mortgages. The downside, however, is that they may be priced a little higher, because the bank now has fees and other expenses they may be trying to recoup. If you have an experienced agent, he or she may be able to negotiate a very sweet deal for you on a property the bank has had on the books for a while.
Buying a foreclosure property is never an easy process, unless you go with an expert real estate agent that can guide you through the process. The rules also vary from state to state. That's why it's so important to work with a real estate broker who is knowledgeable on the foreclosure process in your particular area. If you're interested in buying an Orlando area foreclosed home or property, the SearchHomesOrlando.com team is very experienced and knowledgeable. Don't be afraid to contact us! If you're considering a Central Florida foreclosure property, start searching foreclosures right now.
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