Foreclosures have become an ever-persistent piece of real estate after the collapse of the housing market, resulting in a lot of property up for sale. However, it’s far from free real estate — foreclosed properties can be quite tricky to navigate, even for those who are well versed in property asset management.
So we’ve compiled a brief list of what exactly do foreclosures mean: both for the ones buying and the ones who are looking to sell.
What is it?
Simply put, foreclosure is a legal process where a lender takes back property that was used as collateral in a failed mortgage. Foreclosed property generally belongs to banks, as they are the ones that have both the capital to provide mortgage loans and the buying power to maintain and reacquire these properties when necessary.
Foreclosures can be hazardous properties to invest in, which is typical considering that they’re often bought or sold under dire circumstances. While it was a relatively unknown term earlier in the century, the collapse of the housing bubble has led to a landslide of foreclosed properties being up for sale. Rising costs and the raised standards of living did the rest.
Where can I get foreclosed properties?
It may make sense for you to go directly to a bank to get a foreclosed property, but more often than not it makes more sense for you to go to a real estate agent that specializes in these kinds of property. Banks will generally shy away from advertising their involvement in selling or buying a foreclosed property.
What are things I should keep in mind before buying?
One thing you should definitely keep in mind is the different legal processes required in order to make sure that your purchase is within the bounds of the law. It’s tempting to skip all the paperwork — especially when the property proves to be a steal — but not doing your due diligence when it comes to purchasing property is an awful idea.
Each jurisdiction will often have its own set of rules surrounding the practice of buying and selling foreclosed properties. Depending on the kind of property as well the declared intent that you want to use it for, these differences can affect all sorts of factors like the price of the property itself.
What are the risks of buying a foreclosed property?
The basic risk of buying foreclosed property is often that the upfront costs of setting up or maintaining the property can be sometimes larger than anticipated, due to it being effectively an aborted project. Banks or lenders that currently have possession of the property can certainly do their best to maintain the place to the bare minimum necessary, but it’s important to note that this minimum may not always be up to your standards.
Ultimately, it falls on your judgement if you should consider buying a foreclosed property. If you do find yourself doubting your capability to get something like this completed, you should definitely consider getting expert advice or opinion on dealing with these matters. They can be quite useful when it comes to making a big financial investment such as this!