Anyone who has any experience in Loveland CO real estate hunting has probably come across real estate deals that seem too good to be true by way of foreclosed homes. What the tiny print or online ad fails to mention is how much more frustrating the process can be when it comes to purchasing a foreclosed home. Although there are situations where buying a foreclosure can turn out to be a bargain, there are some risks involved when home buyers opt for this type of investment.
Purchasing a home through traditional channels can be stressful enough; anyone who is thinking about going down the route of a foreclosure purchase needs to first research and seek the help of someone who is experienced in this particular area of real estate. Read on to learn more about the good and bad involved in this unique real estate adventure.
Pros of purchasing a foreclosure
• Price: Foreclosures are often sold deeply discounted, which will vary by location.
• Timing: The sale can go quickly, depending on the motivation of the seller and the phase of the foreclosure.
• Savings: When purchasing foreclosed property at a real estate auction, a cash payment can reduce possible competition.
• Investment: Flipping a foreclosure in order to utilize it as a rental property could serve as a profitable investment.
Cons of purchasing a foreclosure
• Surprises: Sales are “as is”, meaning no discounts and no guarantee when it comes to unseen issues. Homes are foreclosed for various reasons, and previous tenants may have caused damage, taken the appliances, or caused other disruptions to the dwelling.
• Deals go quickly and sales may take longer, depending on the bank supplying the mortgage and how busy your real estate agent is with other home buyers.
• Information on the home may not always be accurate (liens, judgments, titles).
• Repairs can be costly and may take you by surprise.
Bankrate.com recommends securing pre-approval for a mortgage before you begin perusing those home listings. You can then seek out a qualified agent to handle any foreclosure property you are interested in pursuing. You will also want to be familiar with your state’s foreclosure process and the definition of different foreclosure sales (short sales, auctions, REO or real estate owned). The price the home is listed at and other details will depend on the phase of the foreclosure that the home is in during the sale.
Remember to be prepared for what you may find on the interior of the home and for the possibility of lots of DIY work. Although potential issues can arise with any home purchase, those looking to purchase a foreclosed property should be extra diligent with the details. Consider the costs, keep up-to-date with listings and auctions, and remember to pad your budget with extra funds for possible repairs. Do not hesitate to ask questions, to seek clarification on anything you aren’t sure about, and make wise decisions when it comes to your real estate investments.