1. Owning the property in its current state
Acquired assets are usually sold on “as is, where is” basis. It means you will buy the properties including all of its problems. Examples are damaged units or house parts and outlaws or illegal occupants on its vacant lot.
2. Titles may come with existing liabilities
Foreclosed homes may come with conflicts such as being occupied by informal settlers, existing lease, or strong refusal of the previous owner to vacate.
3. Ownership entails patience
Since buying such properties is on “as is, where is” basis, you need to take careful steps in making a decision. You need to seek professional help in determining the value of the property and how much will it cost to deal with the damages.
Moreover, you may find some advantages if you intend to buy one
1. Low price
Foreclosed properties are considered distressed assets, so owners usually dispose of these properties as immediately as possible. These are sold at a lower price than the average market value or attached with discounts for interested buyers.
2. Legitimate purchasing process
Since you can acquire these assets from the government or banks, the transaction is clean. Also, banks have transparency and accountability regarding the condition and legal documents of the property.
3. Quick transfer of titles
In foreclosures, the property titles are transferred to the lender immediately, if it has no pending court cases. That means the bank (or government) takes the ownership and the inherent liabilities as soon as the property is acquired.
4. Updated taxes and utilities
If the properties are under a bank, it is guaranteed that the bank pays real estate taxes, monthly dues, and other related expenses.
5. Sell off the acquired asset at a higher price
Whether you are a home buyer or property investor, these foreclosed properties can be transformed into a home through repairs, upgrades, and renovation. This way, it increases the value of the property, which can be sold in the market at a higher price.
A foreclosure is a home that’s under the control of a bank. People foreclose on their homes when they can no longer make their payments. In most cases, foreclosed homes are much cheaper than other homes in the area, and you can sometimes find a good deal. However, these homes also often have severe damage and structural issues and are usually sold as-is.
Get in contact with an experienced real estate agent if you want to take a risk on a foreclosure. Your real estate agent will help guide you through the foreclosure process because most banks don’t sell to individual buyers. Get an appraisal and inspection once you find a home you’re interested in. You’ll also need to secure funding with a mortgage preapproval. Follow up with your lender and agent to finalize the sale once the results of your inspection look acceptable.