You can get a terrific deal on a foreclosed property at a time when deals are hard to come by.
“The advantage of purchasing a foreclosure property is, in short, price,” says John Soffee, a Realtor with Freedom Realty Services in Midlothian, Virginia.
However, the procedure is more complicated than purchasing a regular listing, and it’s crucial to realize that foreclosures are currently at an all-time low. Furthermore, during the coronavirus outbreak, many lenders halted foreclosing, and generous forbearance programs allowed struggling borrowers to miss payments for up to a year. However, foreclosure rates would probably rise in 2021.
What is a foreclosure?
Foreclosures occur when a lender seizes property from an owner who has fallen behind on mortgage payments and has defaulted on their mortgage. Lenders, for their part, will strive to collect as much of their investment as possible by selling a foreclosed home for somewhat less than its market value.
In the right situation, “you are getting something below market value because the bank is motivated to get the home sold,” says Rose Sklar of The Sklar Team of Coldwell Banker in Weston, Florida. “Also, the bank tends to negotiate more than a typical seller would.”
5 Steps to Purchasing a Foreclosed Property
Here are some pointers to consider when purchasing a foreclosed home:
1. Find a real estate agent who specializes in foreclosures.
2. Obtain a letter of preapproval.
3. Before making an offer, consider the comps.
4. If other foreclosures are selling quickly, raise your bid.
5. Be prepared to purchase a foreclosure “as-is.”