What are the benefits of buying foreclosed homes?

Answer

The obvious benefit is that you are purchasing a distressed property that has to be sold because of an unfortunate financial situation. This should result in a below market price purchasing opportunity.

Financing will differ if you are purchasing the property as an investment or as a primary residence. Many of these properties will also have repairs that will need to be made in order to pass inspection and bank appraisal, so you will need to have a clause in your purchase agreement covering this eventuality. For instance, if it is a HUD house, you may find yourself in a position where you are unable to get a loan on the house if certain repairs are not done and HUD refuses to do them, let you pay for them, or do them yourself. It can be a sticky wicket.

It also depends on whether you are buying only as an investment or if you intend to occupy the house. For example you may not want to live in a neighborhood where most of the homes are rentals, but this may not matter if it is an investment.

As with any major purchase you need to do your homework because many of the laws that protect you in a conventional real estate transaction may not apply to a foreclosed property. Further many times if the person who owned the home was foreclosed on because of not being able to make their mortgage payments, there may be other debts such as property taxes that will need to be considered.

Remember that these people are "losing their home," and you may be the target of their disappointment. On your final walkthrough (or do so before closing), take pictures of the home, particularly light fixtures, fans and appliances. Our sellers made off with many of the lighting fixtures and parts of the house and we had no recourse.

Finally, if you do buy a foreclosed house, make sure that you have some savings to apply to repairs and replacements. These houses are a great deal pricewise, but there will be some sweat equity involved for the bargain.

Answer

At first glance, it looks like a tempting deal: you get a perfectly good home for practically half the price for sale, or even less. But this could be a catch, because every city has unscrupulous sellers, buyers, agents and lenders. So, take note of the following points:
  • Know What You're Buying
  • Do A Title Search
  • Get Insurance
  • Check Into The Equity
  • Work With Your Agent

Answer

Foreclosure homes offers you the smartest way to save lot of money and time (if the foreclosed property is in great shape). If you have no time and not much more money to invest for getting best home in your preferred area then buying foreclosure homes for sale could be the best solution. But follow the advice above.