Buying A Foreclosed Home

by : Jennifer Stromsteen

With the number of foreclosed homes on the market many homebuyers are focusing on them thinking they will get a great deal. While it is true, the homebuyer will probably save some money they should not expect to get bargain basement prices. Banks want to sell homes quickly; however, they know how much the homes are worth and they are not in the market to lose a lot of money.

Buyers who come close to the fair market value of the home will often get it; they will not get it for a steal though. Buying a foreclosed home will often result in additional waiting time as well as work. Banks work on their own time-frame and do not have the urgency to close a deal like most sellers will. A foreclosed home is bought as is and will not have the history available that a seller would be able to give you. This means you will buy the home and accept the flaws it may have; in many cases the former owner will have ceased taking care of it before the home went into foreclosure.

Most foreclosures are bought by investors that are willing to put in the work and effort involved in restoring the property and reselling it for a profit. They have the experience and finances to know what to look for and what to avoid; this is their business. This does not mean the first time buyer cannot buy a foreclosed home to save money, they may however; find a better deal and security by buying a home that is in pre-foreclosure.

The time between a home owner receiving a notice of default from the lender and the time the lender puts the property up for auction is considered pre-foreclosure. Purchasing a home at this time may result in the best bargains and allow you to consult with the owner about the home and the neighborhood. There is an art to it though and it may be difficult to catch it at the right time.

To begin with finding out about pre-foreclosures is the most difficult part and often is achieved by watching the paper for public notices or special websites. Then you will deal directly with the home owner who will often not be happy about losing their home; however, is often happier to sell it then let the bank have it.

Once you have an agreement with the owner you will have little time to complete the transaction before it goes to auction. Being prepared is the key, be sure you are ready to buy a home at this time, have an amount of money in savings for down payment and closing costs, be pre-approved by a lender; these steps will help expedite transactions.

It may be easier to buy a home conventionally but if you are up for the game and want to find savings on the home despite the risks buying a pre-foreclosed or foreclosed house may be for you. If you don't end up with a money pit you just may end up with the house of your dreams!