I am looking into purchasing a foreclosed home. I'd like to know the pros and cons to such a purchase.?

Answer 1

They can be harder to get financed. You should also expect to have to do some repairs immediately upon moving in. Many times the people who lost the home could not afford to keep it up or when they realized they were getting booted, neglected it. Banks will require certain safety items be repaired PRIOR to closing on the mortgage (things like HVAC, windows, electrical, plumbing, etc.). You should not have to worry about paint, carpet, etc. as these items are considered cosmetic.

Otherwise you should be prepared for heavy competitiion. MANY people try and buy foreclosed home as they percieve them as a great value. Some are and some are not.

If the home is already through foreclosure and owned by HUD, expect the closing to take about 60 days or so from the date of the accepted contract. HUD drags their feet on these things.

Good luck!

Answer 2

The answer will vary a lot based on what you mean by foreclosed home.

1. Pre-foreclosure is when the borrower is behind but the lender has not started the foreclosure process.

2. In foreclosure is when the Notice Of Default (NOD) has been issued. The lender it taking action to take the house for non-payment.

In both of the above if you buy you are buying from the present owner. You can cut a deal with them and arrange financing as the two of you agree.

3. Auction. You need to be a cash buyer and prepared to bid at the auction. No loan possible.

4. After the auction if the lender ends up with the house. No one bid enough so the lender took the property. The property is sometimes called an REO at this stage.

Normally the lender will list the property with an agent. You make an offer and have time to arrange financing in many REO transactions.

In many of the stages above you are buying as-is. If there are problem they are there for you to find and then adjust your price before you make an offer.

If you are dealing with a seller in foreclosure (but they have not lost the house yet) expect them to be emotional. They are likely in denial or otherwise not thinking clearly about their options. Some just wait way too long and get wiped out where they could have sold earlier and come out ahead.

Answer 3

Some foreclosures are good deals and some are not. Most of them are in the MLS, so just have your Realtor consider them as another listing, and if it fits your needs then fine, and if not, then that's fine too....

HUD homes usually close within 45 days of HUD signing the contract. On cash deals, it's 30 days. With an FHA 203K, they'll allow you 60 days. Most delays I've seen have been on the part of the lender not being able to get the docs to title in time. On owner occupant transactions, HUD waives the fee for the first 15 day extension. Investors gotta pay if they don't get it closed in time.

I've sold houses that needed alot of work, and I've sold HUD houses that didn't even need to be dusted or wiped off. The one I live in, we cleaned the carpets (just because we had toddlers at the time) cleaned the bathrooms and kitchen and moved in. NOTHING has broken yet and we've been here over two years.

Answer 4

Pros, you could walk into a home with a great deal of equity... cons - to long of a list to say. Be prepared for some work, its not as easy as many think. Good Luck, if you have a never say die/quit attitude you can do it.

Answer 5

if a house was foreclosed for failure to pay taxes can the owners come back and reclaim the property once it has been sold?