Buying A Home - Is A Foreclosure Right For You?
If you’re contemplating between purchasing a short sale or a home in foreclosure, you’ll find the foreclosure option a more challenging one. A foreclosure occurs when the lender decides to execute their legal right to force the sale of a home when the owner defaults on their loan payments. In today’s upside down bank and mortgage industry, you’ll find a surge in the number of foreclosures hitting the market - creating new opportunities for homebuyers searching for a real estate bargain. All communities, from the high end luxury homes down to the most inexpensive ones, are susceptible to foreclosure.
A foreclosure proceeding happens over a specified period of time - the homeowner is first given an opportunity to resolve the delinquent loan. Once the bank has decided to assert their foreclosure rights, a homebuyer can take advantage of purchasing the home during three phases: 1) Pre-foreclosure, 2) At the public sale or auction, and 3) Directly from the bank after the foreclosure (called real-estate-owned or REO).
The main attraction of a foreclosure is the affordable price - whichever stage of the process you decide to purchase one, you’ll most likely find a low price. However there are some disadvantages to buying a foreclosure - let’s check them out:
1) Reduced Protection As A Buyer - In a regular homebuying transaction, you’ll take certain steps such as obtaining title insurance which is designed to protect you from acquiring a property with a defective title. In a foreclosure process, you’ll have to sacrifice some of these protective steps and accept the property as is.
2) How Long Is The Owner Protected - You’ll find most states have laws protecting the delinquent homeowner from having their home ripped away on a moment’s notice by an unscrupulous bank. As a buyer, that means you’re faced with deadlines, unplanned delays, abiding by court rulings, and an uncertain future - especially in those states where the defaulted owner has the ability to “redeem” or buy back the property following a foreclosure sale (usually within 10 days to one year). If those unfortunate circumstances should happen to you, your money will be refunded. It’s important for you to seriously consider whether you want to wait indefinitely for a home you may not be able to occupy.
3) Professional Competition - Word gets out when there’s a great real estate deal so expect to see plenty of investors trying to bid on a property.
4) Unknown Risks - Homeowners in foreclosure typically suffer through financial hardship for a while. They’ve probably cut back on maintenance, fallen behind on taxes, or put the home up as collateral for other debts.
If you still decide to purchase a home in foreclosure, it’s important to have an experienced Realtor assist you through the process. Make sure the agent specializes in them. Only certain Realtors will specifically handle a foreclosure. If you decide to have a regular agent working for you, make sure to delineate each agent’s role, so there’s no confusion. You may also consider hiring a real estate attorney to help you steer through the maze of steps.
Want to find out more about Anaheim homes for sale, then visit this directory to choose the best Anaheim Realtors for your needs.
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