How Buyers Can Acquire Foreclosed Properties for Sale

How Buyers Can Acquire Foreclosed Properties for Sale

Home buyers can get their hands on foreclosed properties for sale in various ways. Each of these ways has advantages and disadvantages. Buyers should always weigh the factors involved in each process and choose the one that will help them acquire a home for as low a price as possible.

Pre-Foreclosure Buying

In this process, a buyer can approach the homeowner directly and make an offer for the property before it gets foreclosed. This option offers the best for both buyer and homeowner. On the buyer's part, he can inspect the property, research its legal standing in terms of title and insurance and make a purchase that is 20-30% cheaper than the prevailing market home price. On the part of the homeowner, he will end his worries of paying for a mortgage he cannot afford without suffering any negative record on his credit history.

REO Buying

A home becomes a real estate owned or REO property if it failed to sell at auction after the lender has foreclosed on it. For a buyer, this opportunity presents a safer method since he would be making an offer directly to the bank or lender for a property that has a clear title and has no liens attached to it. However, most REO foreclosed properties for sale do not offer the same discount as those in pre-foreclosures. In addition, if the home is guaranteed by a government loan, then the buyer would have to deal with the government agency that handled the previous owner's mortgage which could be a more tedious process than dealing with a private lender or bank.

Auction Bidding

Once the pre-foreclosure period is over, a home can be sold at a public auction where buyers can bid for the property. The main advantage is that the process is short and straightforward because once a buyer has been declared the winning bidder; he automatically owns the house and will just have to close within a 90-day period. The disadvantage is that at least 10% of the purchase amount should be paid in cash right after the auction and the buyer usually does not have a lot of time to inspect the property.

Buying foreclosed properties for sale require a lot of preparation and research. But for those who do their homework well, the opportunity to acquire properties at very low prices is always a possibility.

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