subject: What Buyers Should Know About Repossession Homes for Sale [print this page] What Buyers Should Know About Repossession Homes for Sale
Repossession homes for sale are mostly sold at very affordable prices. However, buyers can negotiate for an even lower price if they are familiar with the repossession procedure. Understanding the whole process can also help them evaluate whether a property is worth buying or not.
How Repossession Happens
A property is repossessed by a bank or a lender once the homeowner fails to pay his mortgage, although borrowers who defaulted on their loans are first provided with several options to retain their properties. They can opt for a short sale, a home-for-sale by owner option or sell the property at auction before it gets repossessed or foreclosed. If they failed to use any of these choices, the lender can take over the ownership of the house and sell it as he sees fit.
Banks or lenders can sell a foreclosed property at an auction. If no buyer was able to purchase the property at auction, the home will revert to the bank and it becomes a real estate owned or an REO property.
Opportunities for Buyers
Buyers can acquire repossession homes for sale by bidding at auction or by waiting until the property becomes an REO and approach the lender directly to make an offer. Both processes have pros and cons. For buyers who do not want a long period of transaction, bidding at auction is the better option.
However, they should have enough cash to cover the price of the property since winning bidders are required to pay at least 10% of the purchase price right after the bidding. In some areas of the U.S., buyers are not allowed to bid if they do not have the full amount for the house in cash or in cashier's checks.
For people who can afford to wait, making an offer for an REO property is preferable. The process can take months to complete, but it will be safer than other transaction types since the buyer will be dealing directly with the lender or bank that owns the property.
Repossession homes for sale can be a profitable deal for buyers if they knew what to do and they have prepared for the purchase. Consulting a real estate agent and hiring a home inspector are necessary steps for a buyer to make the deal a good one.
