The Advantages of Buying a Foreclosure
The real estate market has its share of foreclosures -- homes repossessed from owners who fell behind on their mortgage payments, and their homes then became bank-owned properties. Foreclosed homes may need a lot of work or have other problems, but there are several advantages of buying a foreclosure if you're in the market for a new home or investment property.
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Motivated Seller
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Banks are not in the business of maintaining property and want to move foreclosures off of their books quickly. Property taxes, maintenance and the loss of income a homeowner would have contributed if he was making payments on a mortgage are among the costs a bank incurs when holding foreclosed property. Use the bank's desperation to sell by offering a low, but competitive bid on the home.
Repairs Negotiable
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If the home you are considering is in need of repairs, the bank may be willing to complete these repairs for you at no cost to you. Or, you can use the home's condition as part of your negotiating strategy. If the bank is firm about its selling price, you can use your inspector's report to show the bank what repairs need to be made and have the price adjusted accordingly.
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Bank Concessions
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Costs related to closing the foreclosed home may be absorbed by the bank. You can ask the bank to pay for closing costs, give you a credit for the home inspector working on your behalf and pay up property taxes, utilities and other costs before your closing date. You will gain a clear title when you take possession of your property just as you would with a regular home purchase.
Home Vacancy
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Once the foreclosed home is owned by the bank, it will be vacant, which means you will not have to deal with tenants or other occupants when buying the home. You may be able to close quickly with an empty house and prevent another problem from arising: squatters. In some areas of the country, homeless people and others with no legal right to possess a home are occupying foreclosed homes, reports the Orlando Sentinel.
Real Estate Fees
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As with non-foreclosed property, real estate broker fees will be paid by the seller. In this case, that cost is borne by the bank even if your own agent helped to arrange the sale for you.
Considerations
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Do your homework when shopping for bank-owned property. That bargain property could prove to be a headache if you underestimate needed repairs or the property is located in a less than desirable location. You will be in a better negotiating position if the home you're interested in buying has been part of the bank's portfolio for longer than 90 days, according to the Federal Citizen Information Center (FCIC) website.
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