Key Takeaways
- Foreclosed homes can seem like a great opportunity to save money on a home purchase, but be sure to investigate so you understand the risks.
- There are a few different ways to purchase a foreclosed home including a short sale, at auction, buying from the bank or buying from the government.
- Buying a foreclosed home is risky since you’re purchasing the home “as is,” and that can entail additional costs down the line.
According to U.S. Foreclosure Market Reports, foreclosures are steadily increasing and are nearing pre-pandemic levels. But they’re still historically low, says Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors. “It’s very unlike 2008 through 2012, when a massive foreclosure wave was depressing home values.”
Still, because foreclosed homes are often sold for less than their market value, that discount could bring a home within reach for some buyers – especially with mortgage interest rates higher than they’ve been in recent years. However, financing and the home’s condition could present challenges. Before you start bidding, learn more about how to buy a foreclosure and understand the risks.
What Is a Foreclosed Home?
A foreclosed home is a property that has been repossessed and is being sold by the mortgage lender. A home goes into foreclosure, which is a legal process, after the homeowner misses multiple payments – usually three months. Once the homeowner is notified that the…
