Foreclosures & Pre-foreclosures – Advantages and Disadvantages

Everyone is aware of the current real estate crisis and increased foreclosures going on in the States. But what many people may not be aware of, is that there are some great values available if you are looking to purchase a house or property. Whats different now then in the past, is that not only are the number of forecloses at all time highs, but the quality is much higher as well.

There are some great values out there but in order to take advantage of them you should first be aware of the advantages and disadvantages of buying a foreclosed home at a government auction versus the conventional method of using a realtor.

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

- Price is the number one reason to purchase a foreclosed home.

- Many of the homes are in great condition relative to what they cost.

- Many more different types of homes to choose from then in the past.

- No realtors or agencies fees to pay (consulting with a real estate savvy person is recommended).

- Some insurances are optional. It could save you hundreds a month.

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

- Less risky than trading equities in the stock market.

Disadvantages:

- Mortgages may be harder to get (unless you have great credit with your bank).

- You need to be aware of any existing liens, judgments, or unpaid taxes still on 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 your 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 which are properties you can purchase before the auction, and foreclosures. 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 watch during the initial part of your first visit to a government auction to gain experience and get an idea of the procedure.