What are the advantages of buying a home that has been foreclosed on?

Matthew G: What are the advantages of buying a home that has been foreclosed on?
I always see foreclosure listings on real estate web sites, offering homes that have been foreclosed on. What are the advantages and disadvantages of buying a home that has been foreclosed on??

PS I am not a home owner about to lose my house. I am intersted in BUYING a house.

Answers and Views:

Answer by Steve
The advantage is that the seller is more interested in getting rid of the property than they are in getting maximum value. The risk is that the last people to live there probably weren’t all that happy to be leaving and may have done things to create unpleasant surprises for the next owner.

Answer by Mr. Taco
Advantages: usually cheaper, and sometimes you can get a really great deal on a really nice house.

Disadvantages: sometimes the house was foreclosed on for a reason: it wasn’t worth the price, so the owner stopped paying. It is also possible that the person booted out of it damaged it in anger or disgust or just from lack of care. So make sure you have it properly inspected and appreciated before you buy, which of course you should do anyway. There is also the slight chance that the former owner, especially if they were evicted, may still feel entitled to the house and could come around and do or say who knows what. That is VERY rare… but it can happen.

Answer by jairorod64
if you buy the house under the market price, and you don’t have to make a lot of work to the house, yes it cut be a good deal.

[email protected]

www.jairoyourhome.com

Answer by team_kline
Getting a great price is one of the advantages, but if you do buy a foreclosed home, just make sure you get a home inspection. That way you know that the roof is not going to cave in on you, and it will give you a sense of what you need to work on once you close on the house.

Good Luck!

Answer by cardinalboy97
They’re cheaper (under market value), usually. You have to demonstrate to the selling bank though that you have financing, and, as others have posted, the previous owners may have sabotaged the property out of anger.

Answer by novastarbanker
Foreclosures can have the advantage of a much lower purchase price that what the actual fair market value is, depending on how much financing was liened up on the house when it went into foreclosure. In todays market, most of the houses were maxed out at purchase up to 106% of the house value, so it stands to reason that the prices will not be much lower, as the bank needs to cover the loss. There are still some houses that have lower financed amounts on them, but it takes a lot of homework to find them. If you are trying to buy a foreclosure for investment purposes, then you have to be wary of Capital Gains Tax. If you don’t occupy the property for a certain amount of time, then you get whacked with taxes on the profit. Other than that, it is just like buying a regular residential re-sale home. The dis-advantages can be huge. You are talking about a home where the occupants know they are going to be evicted, so they take less than good care of the home, and I have seen cases where they destroy as much of the home as possible, right down to ripping the plumbing out of the walls, and worse. It takes a huge amount of diligence in finding the right home in the right condition to make it worth your while. There are various websites that for a nominal fee you can see the active lists for specific areas. Good luck.

Answer by John
The attraction is you might get a deal on a property.

For ever house that is on the market you have to Do Your Own Research (DYOR). Each one is different and not all are deals.

I wrote a short article that highlights the foreclosure process and the different investment strategies during each phase. I also wrote an article concerning the purchase or Real Estate Owned (REO) by the bank. These are properties that went to auction and no one bid.

See the links below.

Answer by jabeech1
We bought our home and only had to pay the cost of the back owed taxes. We bought it in 2000 for 25,000$ and it is worth $ 120,000.
If it is a good deal, check on the septic system, what other propertys nearby are worth, have someone make sure everything is up to code and go for it.