Buying a repossessed house: advantages and disadvantages
So you’ve finally decided to buy your dream home, but you’re on a shoestring budget. She can still buy her dream home by buying a foreclosed home. Foreclosure is the legal process of recovering the loan balance from a borrower who has stopped making payments.
How to buy a repossessed house?
If you have decided to buy a particular repossessed property, talk to the owner and negotiate a deal with them. You can buy the property at a good price as the owner of the property will seek to pay off your loan amount.
You can also buy a repossessed property from the lending agency that has taken over the property after a particular grace period. Banks auction off repossessed properties in no time.
Do your homework before buying a property
Like most major purchases, you need to do extensive research on the property. Understand how the entire foreclosure process works, and also attend a few foreclosure auctions to get familiar with the process. Learn about the market value of the property and also about the history of the property.
Advantage
– Foreclosed homes come at a deep discount and you can buy a foreclosed home for around 25% less than market value.
– Since there are numerous projects to come, the prices of the houses that are executed have decreased even more.
– As the house is already built, you can move in immediately.
– You can buy these houses with confidence without worrying about the legality of any of the documents as they would have been verified by the bank.
– Most foreclosed homes are quality homes in good residential areas.
– Since you are buying a home from a government-recognized financial institution or bank, the seller can be trusted.
– You can complete the entire transaction in less than two months.
Disadvantages
– You do not get any collateral on foreclosed homes.
– As you are buying the property as is, you may need to do a lot of repairs and alterations. The previous owner may not have had the money to pay his loan payments on time, so he may not have had the money to pay for repairs either.
– The bank will also not reveal any ownership history or the condition of the house.
– The previous owner may have had other debts, such as property tax or maintenance fee, that you may have to pay if you want to buy the foreclosed home.
– Calculating the value of a foreclosed home can be a difficult task.
– You may also need to pay utility bills such as electricity bills and water bills.
– Banks may not offer you a loan for a home that is in foreclosure as there may be legal problems with the property.
– You may be required to pay the purchase price of the property in cash only. This can be a problem if you can’t get a loan from a bank.