As a prospective home buyer, you don’t always have to go with the high prices that the market offers. Foreclosed homes are an affordable alternative that have been gaining ground in popularity. This is due to the low pricing and higher than average flexibility when it comes to making offers for the house.
A foreclosure is an action that a lender takes to retrieve the amount of money that is owed to them by the homeowner through the value of the property. Normally, the homeowner can no longer pay the mortgage amount, therefore causing the lender to seize the home. The house is then placed on the market for a lower price in hopes that it will be bought swiftly.
Pros
Foreclosed homes can be found all over the country. With the potential of a significant mark-down, these properties are appealing for both the home owner and the investor. With the proper amount of work added, it can appreciate in value, therefore giving the investor a significant profit. Also, by following certain negotiation tactics, you can purchase a foreclosed home for a steal.
Cons
There is certain unpredictability to a foreclosed home as unforeseen damages may be overlooked by an inspector. These damages can worsen over time and can cost you loads of money in repairs. There is also an increased demand for these houses due to the house flipping profits that can be made. The home buyer is now competing against the affluent investor which makes closing the deal a bit more complicated than it should be.
