How Long Does It Take to Buy a Foreclosed Home?

Buying a foreclosed home involves a few different processes than simply buying a property directly from a seller, so it pays to be aware of the amount of time that you’re going to have to wait before you can finally call the property your own.

The key is putting yourself in a position to make an as-is offer quickly, while being able to prove that you can secure the necessary funds to make the purchase. If you have to wait to secure a loan then the process takes a little longer, as you would expect from any house purchase.

Without a Loan

If you don’t have a loan then your first step should be to secure one. Many banks will want to see that you have been preapproved before they will sell a foreclosed property to you, as they do not want to be in a situation where they have to repossess the house again a couple of years down the line.

If you have to secure the loan after already making your interest known, you can expect to wait at least a month to get all of the required paperwork done. This means that the entire process will take somewhere in the region of two months to complete.

When Preapproved

If you approach a bank about a foreclosed property and you already have preapproval for a loan then you are in a far better position. For a start, the bank will know that they can trust you, which means they can get the relevant processes started quickly.

As such, you can expect to wait about 3-4 weeks from your as-is offer to the closing of the deal if you already have pre-approval for a loan in place. Closing on the property should not take very long at all once a price has been agreed.

So What About Closing?

The closing procedures on a foreclosed property are generally much quicker than they would be for a property being sold by an individual seller, as you don’t have to deal with any waiting times that may arise as a result of the seller needing to stay in the property you have just bought, as it is empty and thus available for you to move into as soon as you are ready.

Furthermore, banks will also be very keener to get the house mortgaged to a new owner, which means you will often find the paperwork gets completed much more quickly. Additionally, as you are taking away any sentimentality involved in the sale you will also find that things happen a lot more smoothly.

The Final Word

As such, a general rule of thumb is that you should be able to purchase a foreclosed property in about a month, assuming that you have all of the relevant finances sorted out beforehand.

If you don’t then you will need to wait for whatever time your lender requires to secure a loan, in addition to the time it takes for the deal to be processed, which usually leans towards 2-3 months.

Buying a Foreclosed Home: Advantages and Disadvantages

So you’ve finally decided on buying your dream home, but have a small budget. You can still buy your dream home by buying a foreclosed home. Foreclosure is the legal process of recovering the loan balance from a borrower who has stopped making payments.

How to buy a foreclosed home?

If you’ve decided on buying a particular foreclosed property, speak to the owner and negotiate a deal with him. You can buy the property for a good price as the owner of the property will be looking to pay off his loan amount.

You can also buy a foreclosed property from the lending agency who has taken over the property after a particular grace period. Banks auction off foreclosed properties in quick time.

Do your homework before buying a property

Like most important purchases, you should do a thorough research on the property. Understand how the entire foreclosure process works, and also attend a few foreclosure auctions to get a hang of the process. Learn about the market value of the property and also about the history of the property.

Advantages

– Foreclosed homes come with a huge discount and you can buy a foreclosed home for around 25% lesser than the market value.

– Since there are numerous projects coming up, the prices of homes that are foreclosed have decreased even more.

– As the home is already built, you can move in immediately.

– You can confidently buy these homes without worrying about the legality of any of the documents as they would have been checked by the bank.

– Most foreclosed homes are quality homes in good residential areas.

– As you are buying a home from a government recognized financial institution or a bank, the seller can be trusted.

– You can complete the entire transaction in less than two months.

Disadvantages

– You do not get any warranty on foreclosed homes.

– As you are buying the property as-is, there may be many repairs and modifications that you may have to make. The previous owner may not have had money to pay his loan payments on time, so he may not have had any money to pay for repairs, either.

– The bank will also not give away any history of the property or the condition of the house.

– The previous owner may have had other debts like property tax or maintenance charge, which you may have to pay if you want buy the foreclosed home.

– Calculating the value of a foreclosed home can be a hard task.

– You may also have to pay utility bills like electricity bills and water bills.

– Banks may not offer you a loan for a home that is foreclosed as there may be legal problems in the property.

– You may have to pay the purchase price of the property only by cash. This can be an issue if you cannot get a loan from a bank.