When shopping in the real estate market for a new residence, choosing to buy from a selection of foreclosed homes for sale can be rather attractive.
Buying foreclosed homes for sale is a serious matter to carefully think through. There are advantages in purchasing foreclosed homes for sale just as there are risks involved.
This is the reason why gaining better understanding of the different types of foreclosed homes for sale is of utmost importance before the deal becomes too appealing that you dive right into buying a foreclosed residential property without truly knowing what will be in it for you.
The Different Types of Foreclosed Residential Properties for Sale in the Real Estate Market
Pre-Foreclosure or Short Sale
Within the process for pre-foreclosure, the original homeowner technically still has control over the house for sale. The homeowner may have come to the point of having the residential property for pre-foreclosure for a few reasons such as failure to settle timely amortization multiple times already or failure to pay property taxes. In such cases, the homeowner will negotiate with the creditor in order to put the house out in the market for sale but definitely below its actual worth or value.
Upon agreement for pre-foreclosure or short sale deal, the original homeowner will have to leave the residential property.
The advantage. In this scenario, you can offer to buy the residence for sale for less than the actual market value of the house. This amount which will be less than the true market value of the house will serve or can be taken as discount on your part.
In addition, short sale houses are for the most part in still in considerably good condition. You may check out Dr. Phillips new houses for sale where you may find the house which you are looking and get it at a great deal.
Auction Sale for Foreclosed Residential Properties
When negotiation in the pre-foreclosure phase does not work out well, the residential property will then be moved into the category of foreclosed homes for sale. The foreclosed house will be sold at an auction.
After the foreclosed homes for sale are successfully sold to the highest bidder at the auction, the property tax liens and other back taxes will be settled while any excess amounts of money for the sale will be handed over to the original homeowner.
The advantage. Auction sale for foreclosed residential properties will be particularly beneficial to you if you are buying homes as is for the purpose of residential real estate investment. You can gain more profits from buying the foreclosed house in its current condition, completely refurbish and restore it and sell it at a higher price now with its clear title.
Real Estate Owned Foreclosed Residential Properties (REO)
While the creditors do not profit from the auction sale, any foreclosed home which failed to sell at the auction sale will immediately move into the complete possession of the creditors and thus, become an REO.
Buying real estate owned foreclosed residential properties is considered to be the more popular way to go about buying a foreclosed house because it is relatively easier and much safer for you too.
The advantage. You will be spared from the responsibility of paying for the property tax lien and other back taxes because the creditors will be obliged to settle these to lift the cloud off of the title of the property.