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Buying a Foreclosure |
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Greetings Edith,
I've recently moved to a new city, and I'm in the process of looking for a home to buy.
Do you have any opinion about whether it is wise or not to buy a home under foreclosure? Are these sales always done through auction? Are there any common issues which arise with such a purchase of which I should be aware?
Thanks for your help!
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Particularly in a new area, you should buy a foreclosure only under the guidance of a lawyer who can guide you through the local process. The lender usually starts the bids with the amount of the foreclosed loan so you'd have to bid more than that.
Here are a few of the drawbacks:
You must usually buy sight-unseen. The unfortunate homeowners who are losing their house do not have to let you in to see the interior. And if they're in financial trouble, the house is often in poor shape.
You must buy for all cash, promptly. No time to arrange a mortgage loan. You'll put some money down when you make a successful bid, and are usually given a short period of time to come up with the rest. So you'd need to have a line of credit set up ahead of time, or else a lot of cash lying around.
You definitely need the lawyer's help to make sure you're not buying into unexpected legal problems, and you'll want to buy title insurance afterwards.
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Edith
Originally published on December 28, 2007 |
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