Pros and Cons of Purchasing a Foreclosure
The primary reason to consider purchasing a foreclosure is to get get a great deal. Homebuyers (or investors) may be able to get a great deal on a foreclosure since the winning bid is usually less than market value. But is it really a good idea?
What are the risks? It is also important to know the difference between a pre-foreclosure and a foreclosure. A pre-foreclosure is a property in danger of falling into foreclosure, but the process has not yet been started. A foreclosure action is completed when a home is sold at auction with the proceeds going to the creditor bringing the foreclosure action.
When a homeowner has fallen behind in payments and the lender has filed a notice of default but not yet started a foreclosure lawsuit the property is in pre-foreclosure. The pre-foreclosure period gives the homeowner time to catch up on past-due mortgage payments plus fees, sell the home to pay off the loan, or work out an alternative to foreclosure, like a mortgage modification, short sale, or deed in lieu of foreclosure.
While these steps can also be taken after a foreclosure action has been started, the time limitations to accomplish these goals can be difficult to meet before the home is sold at auction. A person seeking to purchase a home can learn about potential pre-foreclosures by subscribing to a site such as foreclosures.com.
Even though the bank does not own the property yet, aggressive homebuyers can search for and make offers on homes worth more than what is owed before a foreclosure action is started. The transaction must be completed before the property goes to auction.
When searching for foreclosures, it is best to work with an agent specializing in foreclosures. You will be communicating with a lender solely invested in selling the property. Buying foreclosures are especially risky since the property purchased at auction may be saddled with liens that the auction buyer inherits, and may require substantial repairs to render the property liveable or saleable.
The auction buyer must investigate the property before bidding so that there are no unpleasant – and costly – surprises. Buying a foreclosure can result in a true bargain when done correctly or a costly decision when approached carelessly.
- Do not go it alone – be sure to work with a real estate and title professionals.
- Understand the legal implications.
- Obtain a clear title to the foreclosure.
- Be sure to have the property inspected.
- Be careful not to buy more than you can afford.
- Knowing how to deal with the bank.
- Falling in love with your new home.
Florida National Title Service offers foreclosure title services and can help you safely get a title for your new home. Florida National Title has years of experience guiding Florida homebuyers through the real estate purchase experience and has helped them solve the problems that come up in the process. We will decipher the “legalese” and explain what we need and why we need it each step of the way. The blogs to follow will address specific issues to guide buyers to better understand the process and to help them avoid many of the pitfalls. Call us at (561)408-0729 or visit us at.
Florida National Title Services, LLC
250 S. Central Blvd., Suite 101
Jupiter, Florida 33458
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