Property Foreclosures
Get the best deal on a property foreclosure by educating yourself on the real estate market and the process of foreclosure.
Currently, real estate prices are rising higher, and finding a good deal on a home can be difficult. One way to find homes for less is to search through foreclosure properties. High market prices and interest rates increase the number of foreclosures, and experts say this number is expected to rise in the near future.
A property is typically foreclosed upon when the homeowner is behind on mortgage payments. In the past, buyers could hope to find foreclosures at a 30 percent to 40 percent savings, but now the average savings is somewhere around 5 percent. Also, these homes are generally in some kind of disrepair, so plan to spend some money on maintenance. Liens and taxes increase price, so make sure to check for these fees as well. Time and effort are the keys to finding the best deal on a quality foreclosed home.
There are three times during the foreclosure process in which you can purchase a home. If you would like to buy from the homeowner, you can buy at:
- Notice-of-default (NOD): This is the first stage and is during pre-foreclosure. The homeowner may be willing to negotiate at this time.
- Notice-trustee-sale (NTS): This is also during pre-foreclosure and is just before the house is up for auction. This is the owner’s last chance to sell.
- Real-estate-owned (REO): This is after the home is foreclosed and the lender is in control of the property.
Research foreclosed properties by getting magazines or newsletters specializing in the subject. Check out online databases or consult with local real estate agents who deal with these types of homes. To prepare to buy a foreclosure, know real estate prices of the area you are considering; you should understand property values or have someone who does when you are looking for a foreclosed property.
One additional option is attending city auctions. You can buy homes at auctions, but be prepared when you arrive. You may want to have an informed real estate agent acting as your buyer representative, since you will be competing against professionals. Getting a good deal at an auction is hit or miss since it is dependent on the competition of the buyers. If you do buy, you must pay in cash, on the spot, with no time to inspect the property. You also should be pre-qualified for your mortgage if you plan to buy a foreclosed property.
The other option for buying a foreclosed property is through the lender. With these types of foreclosures, you have less potential for savings but more time to negotiate. When you deal with a bank you also do not deal with liens, taxes or tenant evictions. Check state and local laws to know how to proceed with judicial proceedings if required. A real estate agent can also assist you in this type of foreclosure buying process as well.
If you would like to save money by purchasing a foreclosed home, do so by educating yourself on the proceedings. There are great deals out there on property foreclosures if you take the time to look.