Worried about buying a foreclosed home? Learn the truth.
With so many foreclosed homes up for sale, many people who can afford it are considering buying them. Unfortunately, there are many myths surrounding the sale of foreclosure homes. Learn the truth and see if there’s a new home in your future.
Myth #1 — You Can Get Foreclosed Homes at a 50% Discount
Ten percent is the standard discount for foreclosures. Why? Because the banks still owe the investors. For this reason, banks usually won’t take low-ball offers.
Myth #2 — Most Foreclosed Homes are Damaged
Occasionally, you find a foreclosed home stripped bare by previous owners. More often, the houses are like any other home on the market needing new paint and carpet.
Myth #3 — Buying Foreclosed Homes is Risky
This can be the case if you buy a foreclosure through the courthouse or auctions. When buying a foreclosure through auction, you need to ask about buyer’s premiums and other fees. However, if the foreclosure is bank-owned, the bank clears debts, liens, and other hidden costs. Bank-owned properties offered by real estate agents usually have the same closing costs as regular home purchases.
Myth #4 — Foreclosures Depreciate Faster
There isn’t any reason for a foreclosed home to depreciate any faster than a traditionally bought home. If anything, buying the home at a discount gives you extra padding toward depreciation.
Myth #5 — You Need Cash to Buy a Foreclosure
You can buy bank-owned foreclosures are with traditional mortgages. If you buy a foreclosed home through an independent auction, you might have to pay in cash.
All in all, buying most foreclosure homes is just buying a regular home. As always when buying a new home, you need to ask questions, not assume anything and don’t take anything for granted.