I’m sure you’re aware of the real estate and foreclosure crisis going on in the United States. Because of this, there is an excess of homes on the market. Obviously some properties will be run down in unappealing neighborhoods as usual, but what’s different this time is the surprisingly increasing number of well kept executive style properties that are up for sale for pennies on the dollar.
There are some great values out there but in order to take advantage of them you should first be aware of the advantages and disadvantages of buying a foreclosed home at a government auction versus the conventional method of using a realtor.
The advantages of buying a foreclosed or pre-foreclosed property are:
- The great prices available on foreclosed/pre-foreclosed homes is obviously the number one advantage.
- More often then not the properties are in very good condition relative to price.
- The selection range of home available to choose from is extensive.
- No middle man (Realtor) to have to go through or additional fees to pay (although you should consult with someone along who can inspect the home(s) for you).
- Insurance is optional which if not required will provide an additional monthly savings.
- Great investment opportunity (i.e. rent out or flip that house)
- Not as risky as stock investing, plus you will own something of physical worth.
Disadvantages:
- Borrowing money may be more difficult, unless you have strong credit.
- There may be existing liens or unpaid taxes against the property.
The most important thing is to make sure that the home you’re interested in is clear of all liens. You should also find out in advance what payment options the government auction will allow, and if required have your bank loan in place ahead of time. Make sure you have some cash saved up just in case, just as you would when purchasing a house through a realtor.
Government auctions are being held throughout the US and Canada. You can find information about upcoming auctions and pre-foreclosures (homes you can buy before the auction) on the internet. Most listings provide informative details on each home or property. Purchasing a home through a government auction can be a very rewarding experience and doing your research ahead of time will allow you to be prepared. In fact I would recommend attending a few auctions before you are ready to purchase so that you become familiar with that environment.
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