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What you Need to Know about Foreclosed Home Listings?

Foreclosed homes are frequently a hot topic in the news today as more and more foreclosed properties make their way into local real estate listings. If you have considered purchasing a foreclosed property, there are a few things that you should know. First, it is important to understand what a foreclosed property is.

A foreclosed property is one which has been taken back by a mortgage lender or a bank because the prior homeowner defaulted on the loan. Banks will typically sell such properties at a lower than market value because they need to recover the cost of the loan. While the process can vary, what usually happens is the bank will sell the property at a public auction, where people can bid on the home. The main attraction to buying such a property is the possibility of being able to purchase a home for much less than it is worth.

Before you rush out to begin bidding, the importance of gathering critical information should be understood. Some foreclosed homes are actually listed with real estate agents, in which case they are often known as REO or real estate owned properties. In other cases, the properties may be listed to be sold at auction. In either case, you need to try to obtain as much information as possible about the property from whatever notice or foreclosed home listing is available, including the legal information for the property, the size, location and outstanding loan details.

Once you have some of these details, it is important to do a bit more research by comparing the properties that interest you to others on the market. In particular, you can learn how good a deal you may be able to make on a property by comparing it to others that are for sale at actual market values. Keep in mind that when you purchase a foreclosed property that it will typically be important for you to pay the least amount of money possible for the property so that you save enough to make any necessary repairs and still be able to resell the property later if you should decide to do so. Even if you are not considering purchasing the property for resale purposes and intend to live in the home, you should remember that foreclosed properties sometimes have maintenance and repair issues which will need to be addressed. If you overpay for the property it could mean that you either will not save any money on the purchase or will spend more than you intended.

Generally speaking, you usually will not have an opportunity to perform an inspection of the property prior to purchasing it. The only time this is possible is if you are able to purchase the property when it is listed with a real estate company by the bank that holds it. While purchasing the property as a REO does provide the advantage of being able to perform an inspection, you should also be aware that you may not be able to save as much money at this point because the bank will need to recoup even more funds lost in dealing with the property if it has reached this point, including the cost of the real estate commission. This is why many savvy buyers make an attempt to purchase foreclosure listings at a public auction rather than wait until the bank lists them on the open market.

When you purchase a foreclosed property at an auction, you need to be aware that you will be expected to pay 10% of the final purchase price the day of the auction. You will usually need either a cashier's check or cash that day to pay the deposit and hold the property if you are the highest bidder. If the property has attracted a good amount of attention, there may be multiple bidders, which means that the final selling price could exceed the amount that is owed on the loan. If you do win the auction, you will be expected to make arrangements for financing and complete the transaction within thirty days of the auction. If you are not able to do this, you will typically lose your deposit and the home will be either placed up for auction again or listed for sale on the open market.

Purchasing foreclosed properties offers the opportunity for numerous advantages, including the ability to save money on the cost of a home that would typically cost much more and the possibility of saving time.



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