What is a foreclosure home?
A foreclosure home is a home sold by a lender, for example, a bank, a lending company or a private lender. A lender takes control of a home via the foreclosure process when the owner fails to make their mortgage payments.
A foreclosure is unfortunate, and neither side, the bank and owner, is happy about it. Banks are in the business of lending money, and they do NOT wish for foreclosure. Hence, banks sell the property as quickly as possible to circulate their money, typically for lower than the market value.
Keep in mind, buying a foreclosure home is different from buying from an average seller. Banks may settle with less money, but legal documents are in place to ensure no responsibility and legal obligations after the selling - it is an as-is purchase to its full extend. It is not a purchase for the faint of heart. Typically buyers are investors and contractors with experience who can afford the risk. Their goal is to fix the issues and sell the home for a quick profit.
What are the advantages and disadvantages of buying a foreclosed home?
The only advantage of a foreclosed home is possibly the lower price, which is not always the case. I have witnessed several times in my horror that too many buyers happen to compete for the same foreclosed home and pay close to the home's actual value. I am sure the lander was happy about it.
Here are a few drawbacks of buying a foreclosed home to mention:
It is possible that the previous owner might claim and take back the home at any time before closing. And the buyer has no claim for the time and money spent during the buying process.
Buying a foreclosed home comes with some risks that one needs to pay close attention to. Unless you have experience in the process and hence buy the property for the right price, it may be a time-consuming and expensive endeavour.
The above Real Estate article was provided by David Khosravi, a leader in his field in North York, Willowdale Real Estate, Reach out to David via email: firstname.lastname@example.org or by phone: 416.990.2424