Homebuyers: What You Need to Know About Foreclosures

Are you looking to buy a new home?  If you are, you may examine the online websites of real estate agents or pick up copies of their printed brochures.  Of course, this is a great way to find and buy a new home, but there is another step you may want to take.  That step involves reviewing foreclosed properties available for sale.  In a time where foreclosures are on the rise, you may be surprised just how affordable they are to buy.

One of the most common questions asked by perspective buyers is what causes a property to enter into foreclosure.  Typically, there is nothing wrong with the property itself.  In fact, the current or previous homeowners may have taken great care of it.  Foreclosures occur because of financial difficulties.  These difficulties may include an injury that prevents someone from working, being terminated or laid off, excessive debt, or divorce.

If you are interested in buying a cheap home, one of the best approaches to take is to negotiate directly with the current homeowners.  In many states, this is possible before the foreclosure proceedings get underway.  In this case, the home is in a pre-foreclosure stage.  As this point in time, homeowners facing mounting debt can try to sell their homes.  And, you will find that many want to.  You may be able to get a great deal.  It depends on the current balance owed on the mortgage, as well as the amount of money the homeowner needs to relocate.

Homeowners trying to sell their homes while in the pre-foreclosure stages will often advertise their home is available for sale online or in newspaper inserts.  A significantly reduced home is a good sign that the homeowner is facing foreclosure.  You also have the option of approaching those facing foreclosure independently.  Information for doing so can be acquired online or in local government offices, as foreclosures are public notice.  Approaching a homeowner in financial trouble may work to your advantage, but many consider it be a risky and immoral approach.  

After a home has been foreclosed on, many banks will try to find a new owner right away.  This is often done through an auction.  This auction often occurs at local county office buildings or at the lending institution.  Foreclosure auctions are often considered one of the best ways to get an amazing deal on a home, but you, as a buyer, may be faced with multiple rules and restrictions.  You may need to have the money upfront or at least proof of required funds, as most auctions do not allow loans.  You also rarely get the opportunity to see the property in question or inspect it.  This means that you are not only buying the property as-is, but you are buying it blindly.

Before deciding to buy a foreclosed property, it is important to review all state laws pertaining to foreclosures.  Learn as much as you can about the proceedings.  For example, certain states have what are known as redemption laws.  This, essentially, gives a borrower time to make good on their loan payments.  If you are unaware of these or other similar laws, you may find yourself in a pinch.  Why?  Because even after you have successful won a foreclosure auction, the borrowers can reclaim their home if they can rectify their delinquent payments.  

Finally, know that if you purchase a foreclosed property, whether you do so through a real estate agent, directly through the bank or at a foreclosure auction, you are required to evict all current occupants.  Many individuals actually find this difficult, on both physical and emotional levels.  If you foresee a problem, such as if the tenant or previous owners are already making it known that they will not move, you should seek professional assistance.  This assistance should come from local authorities or a well-known and reputable lawyer, namely one who specializes in real estate or foreclosures.

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