Are More Foreclosures on the Way?

by Miranda Marquit

Over the past couple of years, it has been possible to find good real estate deals by focusing on foreclosures. Indeed, in some markets it’s more expensive to rent than it is to buy a home. However, the foreclosure situation may be about to get worse. So, if you have been thinking that you have largely missed the foreclosure boat, you might have some opportunities coming up.

Foreclosures in Limbo about to be Released

Are more foreclosures on the way?

Will you see this sign more frequently in your neighborhood?

According to CNN Money, there are thousands of foreclosures in limbo right now. These foreclosures are mostly in states that require some sort of judicial review before the process is completed. Because of the robo-signing scandal, many lenders feared that their processes wouldn’t hold up under scrutiny. In order to avoid legal issues, many halted foreclosures in order to sort out the problems in the system.

Now, though, many lenders feel more confident about their processes, and foreclosures are about to ramp up again. “Foreclosure squatters,” who have been living in their homes for up to almost three years without paying their mortgages, could soon be evicted. According to the CNN Money article, that means that we could see quite a few more foreclosures in the housing market.

As more foreclosures hit the market, this could be a chance for you to buy a home relatively inexpensively — if you’re ready to buy.

Tips for Buying a Foreclosure

If you are interested in buying a foreclosure it’s important that you understand the process, and that you understand what you are getting. As always, it helps to be informed. Research the foreclosure market in the area you plan to buy. You can also check for a real estate agent who has experience with transactions involving foreclosures. The right person on your side can be a real asset. Other things to keep in mind as you buy a foreclosure include:

  • Get your financing lined up first: You have to move fast on many foreclosures. For best results, visit a lender for pre-approval. Get, in writing, how much you are pre-approved for so that  it is clear you are serious and able to buy. You can also have the cash together.
  • Expect the home to be “as is”: Most foreclosed homes are sold “as is.” This means that you aren’t going to get many concessions from the bank that owns the home. You could be missing something as trivial as fixtures, or you may find the wiring has been pulled out. Some previous homeowners trash properties on their way out. You need to be prepared to make necessary repairs.
  • Make sure you are comfortable with the location: Determine your requirements for location. Do you like the neighborhood? Is it close to the amenities you want? Visit the foreclosed home and size it up for yourself, and make sure that the most important points are covered.

Buying a foreclosure can represent an opportunity if you have the ability to fix problems with the home, and if it is what you want. And, if the analysts are right, there should be plenty more foreclosed properties on the market soon.

Photo credit: JefferyTurner

Published or updated April 22, 2012.
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{ 3 comments… read them below or add one }

1 Krantcents

Foreclosures are a lengthy process because the bank must accept your offer. It can take months for just that part. Patience is important in that respect.


2 Jess Day

You are correct that in some places renting can be more expensive than buying your own home. It is great to watch out for foreclosures but then again, you need to wait for quite some time before you get the approval. The process is quite long and you are right in telling that a buyer should understand the process thoroughly. Those are great tips. Cheers!


3 Sher

I was a Realtor before everything went completely belly up and I always advised my Buyers to hire their own inspector to go over the property before they made an offer. Of course, it didn’t help in negotiations as it would if the property were sold by a regular Seller.

But, it helped them be sure they could afford the bills that were coming after they purchased the property “as-is”. Lots of my Buyers got some really fantastic deals buying foreclosures, and hopefully none of them were surprised after they got the keys. 🙂


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