Foreclosures & Pre-foreclosures - Advantages and Disadvantages
I’m sure you’re aware of the real estate and foreclosure crisis going on in the United States. Because of this, there is an excess of homes on the market. Obviously some properties will be run down in unappealing neighbourhoods as usual, but what’s different this time is the surprisingly increasing number of well kept and even executive style properties that are up for sale for pennies on the dollar.
If you are considering buying a foreclosed home from a government auction then you couldn’t be lookin at a better time then now. Before you do though you should be aware of the advantages and disadvantages of buying foreclosures over using a realtor for a non-foreclosure property.
The advantages of buying a foreclosed or pre-foreclosed property are:
- Price is the number one reason to purchase a foreclosure.
- Many homes are in good condition for much less than their market value.
- Variety and selection is better then it has ever been.
- No Realtors to have to go through or agency fees to pay (although you should still get advice from someone who knows something about real estate).
- Insurance is optional. Results in additional monthly savings.
- Landlord or resell venture opportunities.
- Less risky than trading equities in the stock market.
Disadvantages:
- A mortgage could be hard to obtain, unless you have borrowing leverage
- There may be existing liens or unpaid taxes against the property.
The most important thing is to make sure that the home you’re interested in is clear of all liens. You should also find out in advance what payment options the government auction will allow, and if required have your bank loan in place ahead of time. Make sure you have some decent cash saved up just in case, just as you would for purchasing a house through an agency.
Government auctions are being held regularly across North America. Check the Internet to discover information on the upcoming auctions and the property listings at each auction. Many sites will display images of properties that are in pre-foreclosure (properties you can purchase before the auction) and that will be each particular auction. Buying a foreclosed home through a government auction can be a very rewarding experience, but make sure you do your research first. You may wish to just watch during your first visit to a government auction to gain experience and get an idea of the procedure used.
