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Why Buy a Foreclosure
Why Buy a Foreclosure
What is the big deal about government foreclosures?
Four percent of all homes sold in the United States will eventually go to foreclosure. There are several types of foreclosures and we will explain the process, pros and cons of each throughout this article.
Divorce, loss of employment or loss of life, are the most common reasons for a foreclosure to occur. A foreclosure is what happens when the lender of the money to buy the home is not paid back in a timely way. When one of the three situations listed above transpires and the homeowner is not adequately prepared, a foreclosure is most likely to be the end result. Soon after one of the big three occur the homeowner is several months behind and the mortgage holder will not negotiate with the homeowner as special exemptions cannot be made for every home owner going through difficult times. It seems evil and possibly oppressive but very often a foreclosure can be the best thing for the homeowner. Removing the pressure and allowing the homeowner to potentially live in the house for several months free of charges.
After the homeowner has vacated the home it is given to the government agency that insured (FHA) or guaranteed (VA) the mortgage. This agency will begin the process of cleaning and appraising the property. The fact that these houses are so plentiful does not allow the federal government to determine the debt of each house independently. The homes are sold for the appraised value at the time of sale. When a property is under appraised it is given a list price below the market value. These under appraised homes are not a rarity.
In truth the vast number of these properties produces countless numbers of under valued properties. Appraisers are asked to perform ten to twenty appraisals in a single week, far more appraisals than can be performed with the degree of accuracy normally associated with a normal appraisal. These appraisers bid on the job of appraising thousands of properties at once and rely on volume in order to make a profit. With volume come mistakes. These mistakes can and do go both ways. When you see a property that has obviously been over appraised find solace in the knowledge that right around the corner there is bound to be a home that is under appraised.
Take advantage of the volume of homes that these agencies are dealing with and profit from it. As a first time homebuyer you hold all of the cards.
