It seems that since the last real estate market crash people have been more interested than ever in foreclosures. If you are also interested in buying a foreclosure property it’s important to learn about foreclosures. With the right knowledge, you could save thousands, so it’s important to be prepared. Read on as we bust the most common foreclosure myths.
You Always Save Huge
Buyers often have the idea that foreclosures will sell at discounts up to 50%. While saving money is a huge reason to shop for a foreclosure, it isn’t so dramatic. Typically, foreclosures will sell for around 17% less than the standard price. That’s still a pretty big chunk of change, but nowhere near 50%, Be prepared to spend money when looking at foreclosures and enjoy the big, though not a 50% discount.
You Need Cash
Some foreclosures need cash up-front, but not all foreclosures work this way. From a lender’s perspective, buying a foreclosure is very similar to buying a standard property. To buy a foreclosure you would most likely get loan pre-approval and get funds from a mortgage lender. By having all of this figured out beforehand, you can quickly make an offer.
It’s Super Risky
No property purchase has zero risks. But contrary to common belief, foreclosures are not riskier than other property purchases. In fact, with proper communication and assistance, buying a foreclosure can be just as safe and buying a regular property. It’s important to understand the possible issues with foreclosures, but it is possible to avoid them. Just like any purchase, you just need to be careful with your money.
They Lose Value Fast
Not only do foreclosures retain their value, they tend to increase in value. Just like any other real estate purchase, there is no guarantee that your property will go up in value. Doing a good and well thought out renovation should increase the selling price. Thinking it out well is the key. Investing a lot of money into a renovation without checking what sells better in your market won’t do much for you. It is very possible to increase the value of your home. Just remember that it will require work and planning.
Banks Are Desperate
Even though banks are trying to make their money back, they aren’t desperate. Banks, like any business, are held accountable to their investors. It is important for them to get back any money they stand to lose. Banks will never just give their properties away. In fact, many banks will try to sell for above the listing price. Don’t assume that banks want to get rid of properties as fast as possible.
Hidden Costs Abound
It’s often thought that any foreclosed property has a ton of work to do on it. Just like any piece of real estate, this may or may not be the case. All that foreclosure means is that the owner wasn’t able to pay their mortgage, not that they destroyed the property. It is also worth noting that closing costs for foreclosures are usually the same as with traditional sales.
Understanding the myths and truths about foreclosures is important to make smart decisions. By learning more about what you are buying, you’ll be saving lots of headache. Keep these points in mind when searching for foreclosures and make the best of your time and money.
Are you looking to buy a foreclosure? What made you want to buy one?