Roughly 11 percent of homes sold fall into the foreclosure category and account for a substantial part of the real estate market. While buying a foreclosure home isn't for everyone, there are many instances where a foreclosure can offer a lot of potential benefits to the buyer. There are pros and cons to foreclosures but don't let the hype scare you away from what could be a great opportunity.
What Exactly Is A Foreclosure?
Put simply, a foreclosure is a property that has been put on auction by a bank because the owner has fallen behind or stopped making mortgage payments altogether. The bank repossesses the property and attempts to sell it to recoup the money lost from the lack of payments. When the bank auction occurs, potential buyers bid until there is a winner.
Things To Keep In Mind…
When buying a foreclosure home there are a few things to keep in mind. The home for sale in Haines Ridge in Haines city will be sold “as-is” meaning there won't be an opportunity to ask the seller to make repairs. Any repairs you may want or need to make would have to come out of your pocket. In some cases these repairs can be extreme if the property was abandoned or vacant for a long period of time and could be beyond the realm of the regular DIY handyman.
While there are some inherent risks with purchasing a foreclosure home, there are also numerous benefits and opportunities.
You Can Save BIG
Some foreclosed homes sell at price points well below what they are truly worth. Besides the fact that everyone loves to save money, this discount can allow you to move into a neighborhood that otherwise would be outside of your reach. This saved money can also go straight towards any upgrades, customizations, or renovations you would want to do regardless of the specific type of home you purchased.
Less Competition In Competitive Markets
If you've been keeping track of homes for sale in Haines Ridge in Haines City, you will have likely noticed how quickly homes can go under contract once they have hit the market. In this type of competitive market, buying a foreclosure can ease a lot of the stress of competition. The pool of buyers considering a foreclosure home is much smaller than those looking for a turnkey new build or resale home. This competition disparity gives you a higher percentage chance of getting the home you want.
If you purchase a foreclosure at a price below its market value, and you can be disciplined with your renovation/upgrade budget, you can easily move in with instant equity. This equity is created by the gap between what you spent on the home and what the home is now worth in the real estate market. That equity raises your net worth and can be an asset in the future with options like a home equity line of credit.
Return On Investment Can Be Huge
Similar to equity, your return on investment can be a huge benefit of the foreclosure market. Renovating and “flipping” a home for a quick sale can generate income or holding on to the property and eventually selling and moving to something new will cash in that equity at a higher level than if you had paid full price from the start. For anyone who looks at the purchase of a home as a business decision, foreclosures can hold vast untapped investment potential.
Foreclosed homes may not be for everyone, but those willing to take on the process can reap huge rewards. If you are someone who has been looking for what seems like forever and haven't found the perfect home, buying a foreclosure home could open up more possibilities than you thought were available. Even if you decide to go a more traditional route, foreclosures should be acknowledged as a fantastic option within the real estate market. Contact us today to know more about foreclosed homes.