Every year, one out of 200 homes will be foreclosed upon. But if you’re in the market to buy a new home, that’s good news for you! Buying a foreclosed home can come with a lot of perks that make homeownership more attainable for buyers of all budgets.
Let’s talk about some of the best benefits of buying a foreclosed home.
1. A Cheaper Home
The best part about buying a foreclosed home is the low price. When you compare the foreclosure price to a similar house in a similar neighborhood, sometimes a foreclosed home is 37% less than the current going price.
This means you can get the same size house as you were looking for, at a much smaller mortgage price. You can use that extra space in your budget to pay off your mortgage faster. Or, reprioritize those funds into home improvements or investing.
So if you’re looking for a steal, keep an eye on foreclosed homes.
2. A Great Neighborhood
Foreclosure happens in every neighborhood across the country. So if you have a neighborhood in mind you’d love to live in, but prices are a bit out of reach, don’t lose hope. Keep an eye out for foreclosures in that area.
Remember, though, that other buyers are likely looking for the same place. When a foreclosed home opens up, be ready to move fast. Make sure you’re preauthorized with a mortgage to show you’re serious.
3. Move-In Ready
Most foreclosed homes will have some type of damage that you’ll need to repair. But move-in ready foreclosed homes do exist, and they’re not too good to be true.
Sometimes you can find a true diamond in the rough. Some foreclosed homes are move-in ready. This doesn’t happen too often, so when it does, take advantage of it.
Understand that other buyers are looking for the same diamond. Be ready to make an offer quickly.
Finds like these are rare. So if you find one you love, don’t let it pass you by.
4. Good Investment Buys
The saying goes you don’t make money on the sale, you make money on the buy. So when you buy a foreclosed home, you’re already in a great spot. There are three great ways to make money off a foreclosed home.
Wait for the Neighborhood Value to Grow
Consider buying a foreclosed home in an up and coming neighborhood. Sometimes simply sitting on the property for a few years will put you in a good spot.
The neighborhood has gained value, so your home has too. You can sell it at a profit. Of course, as you wait for the value to grow, make sure to keep the home maintained so it doesn’t fall into disrepair.
Are you a fan of Chip and Joanna Gaines or other HGTV home flipping shows? You’re not alone. A foreclosed home is a great home to flip for a profit.
Start by repairing damaged infrastructure and updating outdated flooring, floor plans, and paint. After you improve the landscaping and curb appeal, you can flip the home and sell it quickly for a profit.
Flipping houses is a time-consuming endeavor. But if it’s something you’ve always wanted to try, a foreclosed home is a great way to start.
After you’ve made sure your foreclosed home is liveable, you can rent it out. Your mortgage payments will be smaller than if you bought a property at full cost, but you can still charge standard rent prices. As a result, you’ll have more of a profit.
So start searching for foreclosures near me to find potential investment properties.
5. The Bank Might Finance Repairs
It’s not always a guarantee, but if the home has been on the market for a while, you can use repairs as a negotiating tool. When you’re negotiating the deal, bring up the repairs the home will need.
Not every bank will agree to a deal like this. But the longer the home has been on the market, the better your chances will be. Bring it up and see if your bank will chip in.
6. You Can Buy More Home for Less Money
Just like you can use a foreclosed home to land a smaller mortgage, you can use the same mortgage to buy a bigger home.
What if your budget is only big enough for a two-bedroom home, but your family needs three bedrooms or more? Keep an eye on the foreclosures. You can stay in budget, but get the bigger home you’re growing family needs.
7. Foreclosed Homes Come with a Clear Title
Sometimes when you go to buy a house, it will have back taxes, liens, or other financial burdens you need to take care of. With a foreclosed home, the title comes clear. You know exactly what to expect, and you know there is no financial baggage you have to tackle.
When you buy a home, these bags are usually cleared away in the selling process, but not always. With a foreclosed home, your title is always clear, so you only need to worry about the condition of the property.
The Benefits of Buying a Foreclosed Home Are Worth Remembering
There are plenty of benefits of buying a foreclosed home. Buying a foreclosed home can help you get a smaller mortgage or a bigger house for the same price. If you’re lucky, you can find a gem in the rough and get a foreclosed home that’s move-in ready.
Foreclosed homes are great for turning a profit. You’re already buying them well below market value. If you fix them up, flip them, rent them, or wait for the neighborhood’s value to grow, you’ll likely make a nice profit.
Keep checking back for more advice to create the perfect home of your dreams.