Foreclosures & Pre-foreclosures – Advantages and Disadvantages

I’m sure you’re aware of the real estate and foreclosure crisis going on in the United States. Because of this, there is an excess of homes on the market. Obviously some properties will be run down in unappealing neighbourhoods as usual, but what’s different this time is the surprisingly increasing number of well kept and even executive style properties that are up for sale for pennies on the dollar.

If you are considering buying a foreclosed home from a government auction then you couldn’t be lookin at a better time then now. Before you do though you should be aware of the advantages and disadvantages of buying foreclosures over using a realtor for a non-foreclosure property.

Here are some advantages to purchasing a foreclosed or pre-foreclosed home:

- The great prices available on foreclosed/pre-foreclosed homes is obviously the number one advantage.

- Many homes are in good condition for much less than their market value.

- Variety and selection is better then it has ever been.

- No middle man (Realtor) to have to go through or additional fees to pay (although you should consult with someone along who can inspect the home(s) for you).

- You are not required to pay certain insurances.

- Great investment opportunity (i.e. rent out or flip that house)

- Not as risky as stock investing, plus you will own something of physical worth.

Disadvantages:

- Borrowing money may be more difficult, unless you have strong credit.

- There may be existing liens or unpaid taxes against the property.

Making sure that the foreclosed home you’re interested in is clear of all debt is one of the most important things you should do homework on. After that, find out what types of payment plans are allowed, and have any required financing in place beforehand. Obviously any additional savings you may have will help.

Government auctions are being held regularly across North America. Check the Internet to discover information on the upcoming auctions and the property listings at each auction. Many sites will display images of properties that are in pre-foreclosure (properties you can purchase before the auction) and that will be each particular auction. Buying a foreclosed home through a government auction can be a very rewarding experience, but make sure you do your research first. You may wish to just watch during your first visit to a government auction to gain experience and get an idea of the procedure used.