When you are in the market for a new home, you may have several priorities in mind. You want to live in a good neighborhood that is ideal for you and your family. Further, you also want your home to come at a cost that you can afford.
The answer to your home buying search can come with considering foreclosed homes that are listed in your local real estate market. You can find and make offers on foreclosed homes for sale where you want to live by hiring an experienced agent like Carl Chapman REALTOR from eXp Realty to advise and assist you.
What is a Foreclosed Home?
Foreclosed homes are those that have been foreclosed on and are now owned by banks and lenders. Banks and lenders often take ownership of homes that they extended financing on after the loan holders default on their mortgages.
However, they do not want to hang on to the foreclosed homes that they take ownership of and will turn around and make available foreclosed homes for sale to other buyers. Banks and lenders will often offer these homes at much lower prices in a bid to sell them as quickly as possible.
Types of Foreclosure Homes
When you specifically look for this type of home to buy, you may find a variety of types of foreclosed homes for sale. In fact, there are four main types of foreclosure houses.
The first type that you may come across is a pre-foreclosure home for sale. A pre-foreclosure is technically not a foreclosed-on home. In fact, the mortgage holder still owns the home but also realizes the foreclosure is imminent because of him or her defaulting on the mortgage payments.
A pre-foreclosure home can be sold as a short sale in a bid to sell the house before the bank or lender forecloses on it. In a short sale, the mortgage holder must secure permission from the mortgagor to sell the house for less than what is owed on the home loan. In essence, the owner of the home takes a loss in a short sale while the new buyer may be able to purchase the home at a bargain price.
You can also find foreclosure homes for sale at a real estate auction. The bank or lender contracts with a third-party trustee to sell the home at an auction. Foreclosed houses that are sold at auctions are often priced much lower than what they could fetch if they were listed for sale on the local market.
However, buyers who want to buy homes through an auction are often required to have cash on hand. They also may have to forgo having the home inspected or appraised before they buy it.
Alternatively, real estate-owned foreclosed properties for sale, or REO homes, are foreclosed houses that banks or lenders hire real estate agents to list for sale. They list the homes for sale on the open market in a bid to recover the outstanding balance on the properties.
It is not uncommon for an REO home to be listed as a Fannie Mae Homepath property. A Fannie Mae Homepath property can appeal to first-time homebuyers who want to buy a home at a much lower price and with assistance in covering their down payment.
The final type available to buyers has foreclosed houses that are owned by the government. The federal government may take ownership of a house if the initial buyer defaults on a federally subsidized home loan.
These types of houses may be listed as HUD homes for sale. HUD homes for sale are often made available to first-time homebuyers, as well as buyers with lower incomes and credit scores who may not otherwise be approved for a traditional mortgage.
Reasons to Buy a Foreclosed House
Buying a foreclosed-on house can offer you a number of benefits not found with the traditional home buying process. It is true that buying one of these houses can require a few extra steps. However, the extra effort can be worth the effort, particularly when you want to buy the most affordable house possible.
In fact, it is not uncommon to find these houses for sale with price tags that are much lower than their appraisal prices. When you want to move into a preferred neighborhood but worry that you cannot afford the home prices there, you may be able to get one that is foreclosed on and sold for a lesser amount.
Likewise, you can get a smaller mortgage that comes with lower monthly payments. You can fit that home loan better into your budget and overall save money on buying the home of your dreams.
Finally, you may be able to find a lender or bank that is willing to sell the house fast. You may be able to make an offer and close on the house quickly.
Tips for Buying a Foreclosed House for Sale
When you are interested in buying one of these properties, you need to hire an agent who is experienced in listing and selling foreclosure homes. Someone like Carl Chapman REALTOR from West Valley USA can walk you through the process and help you close successfully on a foreclosed home.
You also will need to identify how much that you can afford to pay for one of these homes. After you determine your home buying budget, you should attempt to get pre-qualified and pre-approved for a mortgage.
After you find a foreclosed-on home that you want to buy, you can have your Realtor assist you in making a competitive offer on it. Likewise, you need to have the home inspected, if possible before you close on it. Your Realtor can advise you on how and whom to contact to get the home inspected prior to closing.
A foreclosed home can offer you advantages not found with other homes listed on the open market. You can pay a much lower price for it. You can also move into premier neighborhoods that otherwise might have been out of your price range. You can find homes that are foreclosed on and for sale today by contacting Carl Chapman at EXp Realty.