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Purchasing a foreclosure property can represent significant savings over a traditional home purchase, but the process is more complicated. In order to help you successfully purchase a property, we’ve put together a brief overview which explains the three phases of the foreclosure process and some of the benefits—and challenges—they present.
How Much Can You Save?
Foreclosure properties can sometimes be purchased for 20 – 30% below market value or more. But in markets where demand for homes is great and property values continue to grow, the actual savings can be significantly less. Contrary to popular belief, it’s very, very rare that a foreclosure property can be purchased for the amount of money in default. As an informed home buyer, it’s important for you to know what the market value of any home you’re interested in is. In the case of foreclosure properties, it’s also important to know other financial details—such as the default amount, the amount of the outstanding mortgage loan (or loans) and any tax liens on the property. Once you know what the property is worth, and what is owed, you can assess whether or not the home represents a good value, and develop a strategy to negotiate your best price.
Stages of the foreclosure properties:
Lis Pendens/Pre-Foreclosure Properties
These properties are considered “pre-foreclosure,” and are in the earliest stage of the foreclosure process.
Auction Properties
If a default isn’t resolved during the Lis Pendens phase of the process, properties are auctioned at the courthouse in the county the property is located in.
Bank-Owned Properties
In some cases, properties are foreclosed on by the lender—either directly or through the auction process. These properties are referred to as Bank-Owned Homes, or REOs (“Real Estate Owned”).
Shopping for Foreclosures? Secure Financing Early!
With interest rates ticking up and ARMs adjusting upward, experts predict an increase in the number of foreclosure properties on the market. Foreclosure properties are some of the best opportunities in real estate today with average savings of 10 to 30 percent of market value. Some properties offer savings of up to 50 percent or more! There’s never been a better time to educate yourself about the foreclosures market and line up your resources, so that you’re ready to make a move when you find that ideal property.
Understanding and Navigating Your Way Through the Foreclosures Process:
Foreclosure properties can be a terrific investment, or give home buyers a much more affordable option than traditional properties in this time of escalating prices. But, before you jump in assuming this is “real-estate for dummies” or the next get-rich-quick scheme, think again! You really need to know your stuff when it comes to navigating your way through the process and making sure you’re getting the most bang for your buck.
It’s definitely possible to find great deals in the foreclosures market. You just need to know where to look and be able to differentiate exactly what you’re looking at. With an understanding of the pros and cons of buying at each stage of the process, you’ll be well on your way to a successful purchase you can be proud of.
If you would like more information about these types of properties, a FREE REPORT on "Hidden Properties" or assistance in finding and buying one, please fill in the form below and you will be contacted within one business day.
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