Chattanooga TN Foreclosed Homes
If you often check house listings, you have come across foreclosed houses before. When it comes to prices, foreclosed homes can be amazing. Nevertheless, there are tons of risks associated with buying one. Let’s go through the things you need to know about buying a foreclosed home.
What is a foreclosed home?
A foreclosed home is a house that is currently undergoing foreclosure. Foreclosure refers to a situation in which a lender can take over a home because the homeowner has not been able to pay a mortgage. The foreclosure process can sometimes require a lot of months or years. Anyway, when such a house is for sale, it is a foreclosed house.
Due to the circumstances surrounding foreclosed homes, they often come at relatively cheaper prices. However, they are not without possible challenges. Hidden costs, property problems, and competition are a few things you must deal with. So, you must be careful before buying foreclosed Chattanooga TN homes.
Types of foreclosed homes
Primarily, foreclosed homes are of 4 types: pre-foreclosure, auction, government-owned, and real estate owned (REO).
- Pre-foreclosure homes
As the name indicates, a pre-foreclosure home is still the property of the homeowner. However, it will soon end up in foreclosure. To avoid foreclosure, the homeowner may decide to sell it quickly. A short sale is another name for pre-foreclosure. Technically, a pre-foreclosure home is not yet in foreclosure. But, it still has similar characteristics with foreclosed homes.
Auction is the traditional means of selling a foreclosed home. At the auction, interested buyers will come together to meet a third-party trustee. Notably, the trustee works on behalf of the lender or bank that has seized the home. Interested buyers will say how much they want to buy a home. If possible, all parties will reach an agreement. Auction often eases the process of buying a foreclosed home. Hence, you can buy the home quickly and, probably, at a cheaper rate.
Sometimes, the government can sell properties as foreclosed homes. In most cases, the government agencies seize homes when owners have failed to pay their government-approved mortgage. Typically, these homes can be relatively cheap. In addition, the selling process can be quick and easy.
- Real estate owned (REO)
In other situations, a lender or bank may offer foreclosed homes on the open market. On home listings, this type of home carries the label “REO.” REO homes are seized homes that the bank or lender has been cleared to sell. A real estate agent will be in charge of sales.
How to buy a foreclosed home
Irrespective of the type of foreclosed home you want to buy, don’t lose guard. Remember that foreclosed homes can come with loads of issues. In view of this, here are the steps to buying a foreclosed home:
- Decide the amount you can afford to spend on a foreclosed home
Before you start looking for a foreclosed Chattanooga TN home, create a budget. In other words, decide the amount you can afford. Most importantly, stick to your budget. In general, foreclosed homes can look like a bargain at the first look. Hence, you may want to do more than you are capable because you see a seemingly great deal. If you are not careful, this can be a pitfall that will affect your finances. This is because most foreclosed homes need numerous repairs. So, if you spend more than you can afford on buying the home, how will you repair it? Again, have a budget for a foreclosed home and don’t spend more than it.
- Get mortgage pre-approval
You need to secure a mortgage before you start looking for a foreclosed home. With a preapproval, you will know the mortgage terms and rates. This helps you go for the kind of house that you can truly afford. At this stage, you need to find a mortgage lender that offers you the best deals.
If you are purchasing the property with cash, you can skip this step.
- Look for a foreclosed home
If you don’t have a foreclosed home you are interested in, then it is time you looked for one. Multiple-listing service (MLS) websites usually have a handful of foreclosed homes. Real estate agencies, local newspapers, and banks can also offer some. Check out the available ones to see if any peak your interest. Until you have found the one you like, don’t consider buying a foreclosed home.
- Get a seasoned real estate agent
Real estate in Chattanooga and other areas can be dynamic. Thus, buying foreclosed Chattanooga homes can be somewhat tricky. Factually, if you don’t understand the basics of the market, you can have problems. Therefore, it is paramount to hire an experienced real estate agent. An agent with the Short Sales and Foreclosure Resource (SFR) certificates will be in the best place to help. The Certified Distressed Property Expert (CDPE) can be useful too.
The agent will represent your interest throughout the buying process. Also, the agent has local knowledge of the market. Hence, they can help you navigate the process without much challenge. Communicate regularly with your agent through the buying process.
- Make a reasonable offer
Generally, foreclosed homes are low-priced. Nevertheless, you still need to negotiate before closing the deal. You may be able to get the home at a cheaper price. Before making an offer, check out other foreclosed homes online. Compare the prices to ensure that you will get a bargain for the purchase.
- Ensure professional inspections
Don’t overlook the need to inspect the house. So, hire a professional inspector to take a closer look at the house. This will help you know the damages that require repairs. In fact, you will have an idea of how much you will spend on the repair and renovation of the home. This can help you know whether you are getting a good deal on the home or not.
- Be ready to purchase a foreclosed home in “as-is” situation
Most foreclosed homes are in “as-is” condition. That is, the conditions of the homes may be poor. Structural problems, faded paints, insect issues, and bad windows are the main culprits. Keep in mind that you may have to buy the home in such a condition. Besides, you need to consider this when making your offers.
- Close the deal
When your real estate agent certifies that the home is good enough, you need to close the deal. This involves agreeing on a price, getting the mortgage, and signing the agreement. Finally, obtain all necessary documents and claim the foreclosed home.
In conclusion, buying a foreclosed home seems like a two-edged sword. You can be an exceptionally awesome deal or become a bad, regrettable purchase. So, read the fine print. Don’t rush to buy until you are certain it is worth the price.