Buying a House in Foreclosure
Aug. 17, 2023
Purchasing a home can be an exciting but stressful experience, regardless of the details surrounding the transaction. If you are attempting to buy a house that is in foreclosure, however, there are other aspects you need to consider. Consulting with an experienced real estate attorney when you begin the process will be beneficial as you prepare to make a significant investment in your future.
If you are considering buying a home in foreclosure in the greater Philadelphia, Pennsylvania area, or anywhere throughout Philadelphia County, Montgomery County, or Delaware County, reach out to our knowledgeable team at Richard L. Vanderslice, P.C. for the guidance you need. We are ready to explain the options that are available to you and help you make informed decisions regarding your purchase.
How to Buy a Home in Foreclosure
There are different ways to go about purchasing a home in foreclosure. Understanding the differences involved can help you better prepare yourself to pursue the method that is right for you.
In a presale purchase, the buyer negotiates the transaction with the owner of the home before the house actually goes into foreclosure. It is important to remember, however, that though you may end up getting a great deal on the house, you are also dealing with a seller who is in a potentially volatile state of mind due to legal or financial issues.
Foreclosed homes are often sold at auction to the highest bidder, with houses sometimes selling at massive discounts from their market values. When attempting to purchase a foreclosed home through an auction, you will normally be required to show you have been pre-approved for financing and be able to put down a cash deposit before you are even allowed to bid. Be aware, however, that you may not be allowed to view the inside of the home before the auction, making such a purchase a risky venture.
Real Estate Owned (REO) Sale
If a home fails to sell at auction following foreclosure, it often ends up being part of a bank’s real estate portfolio. In a real estate owned sale (also known as an REO sale), a buyer can negotiate and purchase the home directly from the bank that now owns it. The downside of an REO sale is that the homes often sell at or near their market value, reducing the discount you may end up getting on the property.
Benefits of Buying a House in Foreclosure
In many cases, foreclosed homes end up selling for less than market value, meaning you could potentially come away with a new home for significantly less cost. These bargain prices may be seen as too enticing to pass up, especially in a housing market that has seen prices soar during the last few years.
Though getting a home at a discounted price may sound appealing, there is also a downside to buying a foreclosed home. Physical problems with the home itself can be a significant issue. Foreclosure purchases are “as is,” meaning you’re buying a home in whatever its current state may be, leaving you open to having to deal with a variety of potentially costly repairs.
After buying a foreclosed house, any outstanding unpaid property taxes or liens on the property will now be your responsibility. Finally, the process of buying a home in foreclosure can often be long, tedious, and frustrating. If you’re looking for a great deal by buying a foreclosed home, be prepared to wait.
How a Real Estate Attorney Can Help
Making decisions with the magnitude of purchasing a house should never be taken lightly. Buying a home is a complex process under any circumstances, but adding in the layer of the home you’re buying being in foreclosure requires a trained eye for detail. By working with a law firm that is well-versed in leading buyers through the process of purchasing a house in foreclosure, you can eliminate some of the uncertainty and guesswork involved in the transaction.
If you are looking into buying a house in foreclosure and have questions about your options, we are here to help. Before you get into the process and end up feeling confused or unsure about your next steps, reach out to us at Richard L. Vanderslice, P.C. to make sure you’re on the right track. We are proud to work with clients throughout Philadelphia, Pennsylvania, as well as the areas of Delaware County, Philadelphia County, and Montgomery County. Contact us today to schedule a consultation.