Over the past years, the real estate industry has seen its worse conditions. Several homeowners need to give up their homes to mortgage lenders. Foreclosure auctions have been very common and more people see it as a good opportunity for investments. After a period of peaks in real estate, at last, it is time to buy homes and invest your hard-earned money, which is sitting on banks, for your dream house.
But before you rush to seal the deeds, it is recommended to communicate with a foreclosure lawyer for advice. You can the lawyer for details of the property and for things to watch out. Don't forget, you are investing a sizable nest that if things go awry, you will certainly suffer immense setbacks. Here are some of the things you need to watch out when buying a foreclosed property:
Don't Buy at Auctions. Well, when a property is foreclosed by a mortgage lender, they will post a notice of auction. This is the normal process of foreclosure. After a period of time, when the lender lifts the auction, the former owner of the property can repossess it by paying the asking price. In this case, if the former owner does not want to repossess the property, you can buy it. The good thing about buying on asking price and not a bid is the opportunity to see the property, to inspect if fixtures and parts of the property are great in shape. It is a stupid idea to buy a property when you don't know its current appraisal or market value. For a note, auction bid starts with the mortgage loan balance plus interest, even if the property has lower market value.
Beware of the Former Owner. Mortgage lenders will give a notice of vacating the property to the former owner. However, even if the former owner has not moved out, foreclosure auction still proceeds. When you buy a property and the former owner is still residing in, you will have a hard time evicting the family. Plus, it may be that the former owner vandalize or destroy the component of the house.
Buy from the Bank. If you want to buy foreclosed properties, check if the property is owned by the bank. There are banks that do mortgage loans and they foreclose properties when owners default in paying. It is good to buy from banks to avoid back taxes and to be sure that the property is absolutely vacated. Real estate taxes are very high and you have to get away with it.
Get Pre-Qualifications. If you have a sizable and secured financial capability, lenders will favor you than those who need loan approval. You can communicate with lenders for a pre-qualification. You will be given priority when a property is on sale.
Spend for Renovation. With foreclosure houses, don't expect too much. It is good to allocate amount of money for the renovation of the house. With the renovations, you can increase the market value or appraisal of the property.
