Things to Know About Purchasing a Foreclosure
Wednesday, November 13, 2024
Many people turn to the “Foreclosures” section of online house hunts or newspaper ads. Sure, the price is a bargain, but there is normally a different process when purchasing a home that is in foreclosure. Consider these tips before heading to the auction or making an offer:
- If the property is on the auction block, the bidder will likely need the full purchase amount in cash. The lender is looking to recoup as much from the defaulted loan as possible, which does not allow time for the financing process.
- Most foreclosures have been unoccupied and will be affected by that. The new owner will need to be ready to put in some work and cash to bring it up to code/living conditions.
- Some states allow redemption to the homeowner, and HUD defines this as “...a period after [the] home has already been sold at a foreclosure sale when [a homeowner] can still reclaim [their] home.”
- Because a foreclosed property is sold “as is,” the buyer will not receive any disclosures, meaning, a home inspection is a must! Depending on who owns the property will make a difference in how much time the buyer has to complete the inspection.
- On the other hand, if the property is REO (real estate owned), the buyer will be able to go through the home-buying process in the usual way and have time to secure financing for the purchase.
- An REO will be sold as-is just like an auctioned property, and all repairs will have to be done by the new owner--there are no repair requests or contingencies granted.
- For buyers who are new to the foreclosure-purchase game, going through a bank to buy the property is their best bet versus bidding at an auction.
- For distressed properties, it is recommended that the interested party have a title search performed. Buying a foreclosure takes long enough, and this will help remove any roadblocks.
For foreclosure-hunting convenience, realtor.com® has a search page specifically for foreclosures! Municipality offices also publish notices on tax foreclosures, and if the funding is available, pre-foreclosures and short sales are other great property bargains. Remember to contact a Realtor® that is experienced in distressed sales. Their knowledge and expertise can make a drawn-out process go smoothly!
Courtesy of New Castle County DE Realtor Tucker Robbins.
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