Buying a foreclosed house can be a great investment but it might have some disadvantages as well, contact a realtor to make you visit some foreclosed houses that meet your requirements. Here are a few pros and cons of buying a foreclosed home;
Pros of Buying a Foreclosed House
- Much Discounted Price
One of the main advantages of buying a distressed home is that they are available in much-discounted price than the house that isn’t foreclosed. According to the researches, distressed houses are found to be 5% lesser than their original value. It’s like you can buy a house that isn’t foreclosed in the same area and would have to pay 5% extra money. This is a great advantage as you can save money without worrying about the renovation of the property as the bank owning the property gets its renovation done so you get the house in perfect condition. Previously when these foreclosed houses were sold 15% lesser than their original value, they were found to be in the worse condition and the buyers had to spend a lot of money on the house’s renovation.
- Pressure on the Seller
If the buyer’s agent shows you a property that is in the stage of pre-foreclosure then your bargaining power would be much greater as the homeowner would want to sell the house as soon as possible before it gets completely foreclosed. In such a situation, you could take a licensed home inspector to check the house and help you in making your final decision. In such urgent conditions, the homeowner is pressurized and usually give huge discounts to the buyers in order to avoid the mark of foreclosure.
- Lesser Mortgage Payments
If you buy a foreclosed home under the limit you set for your budget then it is for sure that you would have to pay lesser monthly mortgage payments which is a great reason to consider buying a distressed house.
- You Can Find Your Desired Neighborhood
Living around the people you like and understand is extremely important. Buyer’s agents have a huge list of foreclosed properties in almost every area so tell your realtor about the type of neighborhood you want and if you find one that is suitable for you then don’t waste time and jump in.
- Property’s Title Is Clear
Buying a foreclosed house gives you relief from any hidden taxes or liabilities. Every bank-foreclosed house is clear from any sort of taxes, mortgages, and liens. All these payments are done legally, and you just have to care about the property and its condition. Buying a distressed house means that you are investing your money in a clear titled house.
Cons of Buying a Foreclosed House
- Hidden costs
If you choose to buy a house that hasn’t been foreclosed formally and is in stages before that then the liabilities and costs would be inherited, and you would have to pay all the unpaid taxes and equity lines that can cost you a huge amount of money.
- Quite Daunting For Beginners
If you are a beginner real estate investor then you should not go with the foreclosed house as it can trick you and you might get confused in making decisions and handling all the stuff of real state and the bank. However, if you are still interested in buying a foreclosed house then there are many buyer’s agents out there, visiting one of them might help you in the process.
- Banks Don’t Negotiate
You should keep this in mind that banks always try to make most of their foreclosed properties, and they don’t care about your emotions and situation. All they want is money, they won’t pay heed to any of your negotiating offers. If you agree with their set price then they’ll be fine otherwise they have many buyers in the queue.
- Timeframe Is Short
When you buy a foreclosed property through auction, you would be provided a very short timeframe to gather your funds and clear the payments for the house which sometimes gets stressful for many people.
Both you and your buyers agents washington dc should know these basic pros and cons of buying a foreclosed house in order to stay safe from any sort of damage caused later in the future.