Bargain hunters may be tempted to buy property that has been foreclosed, or is in the pre-foreclosure stage. While this practice has traditionally been limited to savvy real estate investors, the recent increase in foreclosures has made it an attractive option for some ordinary homebuyers.
There are certainly bargains to be had, if one knows where to look. However, there are also greater risks than buying a house on the open market.
Where Can I Find Foreclosed Properties to Buy?
Websites such as Foreclosure.com, Foreclosures.com, and RealtyTrac.com list foreclosed properties, compiled from lists available to the public.
However, the owner of the home may not even know that this information is public record, so buyers should be cautious and sensitive when approaching them with offers. Remember, buying a foreclosed home means that you are dealing with a homeowner who has fallen on very hard times, and is selling his or her home as a last resort.
What Are the Disadvantages of Buying Foreclosed Property?
Homes in the pre-foreclosure stage often have a very short window before they enter foreclosure (as short as 30 days in some states), so a prospective buyer must act fast. This might mean buying the house without conducting a thorough building inspection or taking other precautions.
Additionally, this short window may make it more difficult to have financing prepared to make the purchase while there is still the opportunity.
What Are the Advantages of Buying Foreclosed Property?
With that said, buying a foreclosed property can often leave the buyer out ahead while doing the homeowner a favor. Buying a foreclosed home at less than market value, but more than what is owed to the bank, means that the buyer gets a discount, and the homeowner can pay off their debt with money to spare.
Should I Seek Help from an Attorney?
Contacting a real estate attorney can help you smoothly navigate a foreclosed property purchase. You should especially consider speaking with an attorney if you are new to the real estate industry and are unfamiliar with real estate laws in your state.