Foreclosures – What is a Foreclosed Property?
Unfortunately, since the mortgage meltdown, foreclosed properties have become more
common. Many home buyers see this as an opportunity to find a great home for a bargain
price. While foreclosures can offer some nice discounts, understanding how foreclosures work
and how this affects the buyer is critical to ensure you are getting a good deal and not a
What is a Foreclosure?
First it’s important to understand what qualifies as a foreclosure. A foreclosure is a property
which has been taken back by the lender in order to satisfy an unpaid mortgage debt. It is
owned by the bank or lender and they have now listed the property for sale.
Can I save money buying a foreclosure?
Yes and no! It’s true that lenders do not want to hold onto their foreclosed properties longer
then they need to, but they also understand the value of the home in its current condition.
While deeply distressed properties might be listed at very low prices, good homes in decent
condition might not be listed below comparables in the same area.
Is the buying process different from a traditional sale?
The actual buying process is the same; you write an offer, obtain financing and close. The
differences lay in the protections and opportunities for negotiation during the process. Most
foreclosures are sold “as is” and the lender will not negotiate repairs of any kind. There could
also be clauses which remove other contingencies, such as financing or appraisal. The buyer
needs to read the agreement very carefully.
Buying a foreclosure can be a great way to find a nice property at a discounted price. Not all
properties are a good deal however. Understanding the foreclosure market and reading the
contracts very carefully is the key to buying a foreclosure – this way you get the most home for
your money without buying a problem.