Pros and Cons of Buying A Foreclosed Home

buying a foreclosed homeThere are many questions thrown around all asking the same thing: How long will it take to buy a home? The answer obviously depends on the contract you signed when you agreed to purchase. The day you are able to move in will be specified in the contract, either stating the closing date or the number of days from signing. Typically it takes between four and ten weeks, but it varies based on location.

One way to make the buying process faster is by considering the purchase of a foreclosed home. Since there is next to no room for negotiation on foreclosed houses, and you have to move quite quickly before another person or investor scoops your desired property up, the process can be speedy and often less expensive than traditional methods. There are some downsides as well, so let’s take a look at the pros and cons of buying a foreclosed home.

Pro: Once you find a home you like, the process goes very quickly. Since the occupants are already moved out, you might be able to move in inside of a week.

Con: Preparing for this rapid-fire transition takes time. You need to have a financial backer ready with a loan, a realtor or real estate attorney ready, and the ability to pull the trigger on a house you like without hesitation.

Pro: Buying a foreclosed home can be quite cheap compared to the residential real estate market as a whole. This is because the banks that loaned money to the previous occupants haven’t yet been reimbursed for their loan, so they want to sell the house fast to get back what they’re owed, and maybe a little more for themselves. They are not so worried about huge profits, but will not sell at a loss.

Con: There are essentially no negotiations. The price is the price, and very rarely will it drop. This is because the banks need to recuperate their investment, and spending time negotiating would siphon resources away from more important prospects.

Pro: No haggling means you know the price you will pay.

Con:It also means you get the house in ‘as is’ condition. No discounts for necessary repairs.

Buying a foreclosed home can be a great and speedy alternative to shopping the market for months at a time. Make sure to look into personal property law cases and get to know the legal process a bit more with the help of a lawyer. This will ensure you are well prepared for owning a foreclosed property.