Buying a Foreclosure in Today's Market

Highlights

  • Do your homework before buying a home in foreclosure.
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Is Buying a Foreclosed Home Right for You?

With all the trouble surrounding foreclosures these days, a lot of people may be turned off by the idea that foreclosed homes can also present some excellent deals for buyers. This is something that comes with an unsteady market. For those interested in capitalizing on foreclosures today, there is a lot more to consider.

Is the Title Clear?

The first step in buying a foreclosure is doing some legwork to ensure that the title is indeed clear. Bank-owned foreclosures are the easiest to deal with in this sense. Buying a foreclosure before it is finalized is also possible without title issues, as the old owner must agree to the sale.

Quick Tip
Know your state's foreclosure laws. In particular, learn if your state allows previous owners to redeem their mortgage and reverse a foreclosure should they come into a windfall in the months following their foreclosure.

Bank repossessions (typically houses which did not sell at auction) also offer clean titles to consumers, but not always the best deals. You can be ensured of a clear title when shopping for a foreclosure at auction. Unfortunately, homes at auction do not come with home inspections and should only be bid on by professionals.

Quick Tip
Each state legislature created unique foreclosure and anti-deficiency laws. Follow the links just mentioned to learn the foreclosure rules relevant to you.

Having a clear title isn’t the only important thing to remember about foreclosures today. With most new foreclosures being halted by various lenders for review, the current inventory is going to shrink. This makes acting now vs. waiting for a new batch an important decision for today’s consumers. It is likely that there will be fewer new foreclosures in the coming months, and perhaps into the new year.

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