What is a Foreclosure?
It isn’t the best situation for a homeowner, but it could become one for a buyer. When purchasing a property, most people apply for a mortgage. As long as the whole amount of money isn’t paid, the property belongs to the mortgage lender. That means that if the payments aren’t made on time, the lender could evict the buyer and sell the property to recover the rest of the money. When that happens, the homeowner will receive a Notice of Default, informing them that the house will go to auction. That’s also the moment when the pre-foreclosure period starts. This process involves the sale of the mortgaged property under the supervision of a court. Briefly, a foreclosure means that a court orders a home be sold to pay off the mortgage.
What Advantages Does a Foreclosure Come With?
One common misunderstanding that comes along with this term is believing you can get a house way under its market value. There are cases when the property is sold under the market price, but usually the discount doesn’t represent more than 20%.
If you’re buying the house in the pre-foreclosure phase, the advantages are that you get to inspect the house and see what you’re buying and the purchase will be fast.
In the case of a foreclosure auction, you might get a reasonable discount. You must pay attention though because the downside of this kind or purchase is the inability to check the house beforehand.
Either way, take a good look at foreclosure listings and let us know if you have found the property you were searching for. Don’t forget to schedule an appointment with us so that we can give you valuable advice before deciding. Our team is experienced and real estate market savvy, so that you can achieve the peace of mind of knowing you’re doing the right choice.