Distressed Properties in Foreclosure: An Investor's Dream or Nightmare?

Distressed Properties in Foreclosure: An Investor's Dream or Nightmare

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With the high volume of distressed properties in foreclosure buyers are having a field day selecting great homes with heavy discounts and other perks. But only those who truly understand the entire process of purchasing homes in foreclosure get to reap its benefits. It is important to know the various factors affecting a good foreclosure buy and to protect ones self from the risks involved in this process.

Distressed properties in foreclosure can be purchased through various means. Some homes are sold through short sales during the pre-foreclosure period. In this type of sale, the home owner was allowed by their lender to offer their home for a price that is lower than the unpaid portion of their loan. In other words they are selling the home short and this ensures buyers that they are getting a good price for the property.

Home Auction Sales

Foreclosed homes are all initially sold at auctions. These auctions are overseen by the courts and held at public places. Bidding is open to registered participants who pay an amount typically equivalent to ten percent of the opening bid. Winners of these home auctions are required to pay for the home in a short time usually lasting about two weeks.

Bank-Owned Homes

Most bank foreclosures are sold through listings held by real estate companies or posted at online listing service web sites. The bank usually appoints a broker or agent to handle the negotiations for them. These distressed properties come with title insurance, pest certification and a value appraisal.

Some things to remember when buying distressed properties in foreclosure include the fact that these homes are sold as is and their sellers are not obligated to make a full disclosure on the situation of the property and its title. Some level of research is required from the buyer in order to discover whether the home is in good condition and its title clean as a whistle.

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