Seriously, Are Foreclosures Really Worth The Risk Many home buyers and real estate investors have been prompted by steadily increasing interest rates to be more aggressive in their hunt for bargain homes. Competition for the best-priced and most attractive homes has only increased in most real estate markets and because of that intensity, foreclosures are drawing more and more interest from prospective home buyers and investors.While foreclosures certainly offer some financial benefits, there are also risks involved, as you might expect. Not every foreclosure is the same and while the interest in them is growing, you need to be aware of what to look for when evaluating whether or not a foreclosure opportunist is right for you. Here are some things to look for.Pre-ForeclosuresPre-foreclosure properties can offer an attractive investment or home purchase opportunity to those willing to work for it. There exists a period of time in between when a home owner is notified that their loan is in default and when the bank actually seizes the home to put it on the market to recoup expenses. During that period of time, it is possible to purchase the home and satisfy financing requirements on it. There are two negatives at play when going the pre-foreclosure rate and both discourage a majority of the potential investors that contemplate the pre-foreclosure route. One is the extremely brief period of time available to complete a deal. The period of time is regulated by individual states and usually consists of a couple months. The other discouraging aspect is the necessity to deal with a home owner that is probably embarrassed by the foreclosure and may not even be aware that such information is made public. Knocking on a door or picking up a phone to contact someone that may not even be aware of pre-foreclosure purchases can be a difficult thing to do.The Risky World Of AuctionsThe best advice for those pondering auctions as a way to get in
on foreclosed
property is to simple not get involved at all. The risks are immense
when dealing with a bank-run auction as you will most likely not have
seen the house, have no way to protect yourself against title problems
should they exist and must pay in cash. That collection of traits discourages
most investors and rightfully so. There is simply too much uncertainty
when dealing with auctions to know for sure that the low sticker price
is necessarily worth the hassle of going through title clean up issues
and scraping together the cash for a purchase.Foreclosed HomesAs the
final step on a bank’s path of foreclosure, the home is put up for
sale on the real estate market, though often for at least close to
its market value. Because a home has traveled through a variety of
steps and banks are in no hurry to lose money on any loan, savings
are often slim on foreclosed properties that make it to this step.
However, there are certainly positives. Most likely there will be at
least some kind of discount off of the market price of a property,
albeit slim and deals are much easier to put together. Real estate
transactions more closely follow the format of common real estate transactions
and offer similar protections. So, as you go through the process of
deciding to get involved with foreclosed property, make an effort to
decide which step of the process you want to target. There are opportunities
all along the path of foreclosed properties, but each step has its
own pros and cons that must be weighed against potential benefits.
Having a clear plan will save you headaches later as you complete the
purchase.Published by Joe and Colleen Lane, Realtors®. The Lane Real
Estate Team services Tri City Wa Real Estate, Kennewick Wa Real Estate,
Pasco Wa Real Estate, Richland Wa Real Estate, and surrounding Southeastern
Washington Communities.
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