Are you looking to buy a home to live in, rent out for income, or flip and sell? You may come across a foreclosed home or REO property in Omaha for sale. But is it a good idea? Should you buy a foreclosed home?
According to A Million Acres, “After a homeowner fails to make payments, a bank forces the sale of the home. The bank generally tries to sell the property via a foreclosure auction to recoup its money quickly. If that fails and the lender takes the property back, it becomes an REO, or real-estate-owned, property.”
There are pros and cons to buying a foreclosed property, so you’ll need to weigh the upsides and downsides before buying a foreclosure.
1. A low purchase price
One benefit of purchasing a bank-owned property is snagging a great deal. Lenders are eager to unload these properties and recoup their money, so you might manage to negotiate a foreclosed property’s purchase price down and pay less than you would for a similar home.
2. The opportunity to buy in a neighborhood that’s otherwise out of reach
When you’re buying a home on a limited budget, foreclosures offer a chance to get into an Omaha community you otherwise couldn’t afford. That’s important if you have children and are looking to buy in a specific school district or want amenities that come with living in a particular area.
3. A chance to capitalize on seller concessions
Buyers often incur closing costs when they purchase a property. When you buy a foreclosed home, you can sometimes get the lender to cover your closing costs or make other financing concessions that make the ownership more affordable.
1. You’ll need cash if you’re buying a foreclosure at an auction
When you buy a foreclosed home at an auction, you can forget about financing that purchase with a mortgage – you need cash to make an auction purchase.
Granted, you don’t necessarily need to come up with the entire purchase price on the day of the auction. You might just need to make a down payment. But you’ll need to produce the rest of the cash shortly after the fact.
2. You may need to buy the property as-is
The previous owners of foreclosed homes often don’t do the best job of maintaining them. Homeowners who become delinquent on their mortgage payments tend to have cash-flow issues so that you may find their properties in disarray.
Furthermore, banks that reclaim foreclosed homes rarely make repairs. When you buy a foreclosure, you’re getting that property as-is. You’ll need to fix them on your own. Rack up enough repairs, and the savings from snagging a lower purchase price might disappear.
If you buy at an auction, you won’t get an opportunity to have an inspection done, increasing your risk of taking on more costs.
3. A delay in your closing could occur
Although lenders try to unload foreclosed properties quickly, the closing process can be lengthy. Banks often have backlogs that delay closing. If you need to close on your purchase quickly — say you’re hoping to move your family in before the start of a new school year — you may want to think twice about buying a foreclosed home.
As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. We offer the simple truth about your home and how we can help you sell it fast.
Give us a ring. We would love to help you understand the process and to answer all of your questions. You can reach us at 402 999.0577.