Foreclosure is an ugly word in the real estate world, but it is far more common than one might think. If you’ve been researching homes for sale, you’ve probably come across the term “foreclosure.” But what does that really mean? And why should you care?
Foreclosure is basically a process where a bank or other lender seeks to recover the remaining balance of a mortgage by repossessing the property used as collateral on loan. It’s a sad reality that there are far more houses in the foreclosure market than there are buyers. That’s why if you’re interested in buying foreclosed homes for sale, you’ll want to consult with an experienced, well-trained Carlsbad Realtor who can help you find the best possible deal.
A good deal in the foreclosure market is a house that needs repairs or minor cosmetic repairs. In fact, it’s usually a bad deal if there are any major repairs needed at all. Houses that are in the foreclosure process usually need a little TLC, and having a home inspection done before you make an offer is the best way to make sure you’re getting just that. Home inspections are a big part of a transaction, so you’ll want an experienced, thorough inspector who knows how to check and identify problems. It’s also a good idea to get your home inspected before you start looking for homes, to make sure you’re actually buying a good deal.
A home inspection is basically a review of your investment. It will look at the property’s foundation, roof, interior and exterior conditions, plumbing, heating, electrical, drainage and other systems. It will also examine how the previous homeowner dealt with repairs and if they were timely. For example, was the previous homeowner prompt about fixing leaks and fixing problems when they cropped up? You can’t avoid some repairs, but a good real estate agent will be able to point out current maintenance issues and tell you when you need to start paying more for repairs.
The best thing about dealing with a foreclosure reo property is that the price is often below market value. This means you can often get an amazing bargain. Even though the price will likely be lower than what you would pay if you purchased the home on your own, you won’t have to pay market value fees like you would if you were buying a traditional property. These fees apply to most banks, credit unions, and mortgage companies, and can add thousands of dollars to the final price you pay.
If you have a lot of equity built up in your home, you may be able to negotiate a short sale with the bank. This is where the bank will offer you less than the amount you owe on the mortgage, plus the accrued interest. A short sale is a great option because you avoid having to foreclose on your home. However, it’s important to understand that even if the short sale does not go through and the foreclosure process occurs, you have avoided a lot of debt that could have been obtained through foreclosure.
The last resort for homeowners who have no way of avoiding foreclosure is to take out a short sale on their own. With this method, the homeowner will sell the house for less than what they owe the mortgage company. They will then use the proceeds from the sale to pay off the homeowner’s remaining debt. In order to qualify, the homeowner must have a reasonable chance of selling the house for less than what is owed. This means the homeowner must have a strong net worth or be able to obtain a low interest and secured loan for the rest of their life in order to qualify for a short sale.
Homeowners looking to avoid foreclosure should take action as soon as they can. If you think there is any chance you can work out a solution with your lender, contact them right away. This is the best time to talk about your financial situation so you can make an informed decision about your mortgage payments. The earlier you start working with your lender, the more likely you are to prevent foreclosure.