While the housing market may be strong now in Berks County, some analysts are predicting that the number of foreclosures could go up by the end of the year due to shutdowns impacting the economy. While that may be bad news for some, there will be home buyers who want to take advantage of foreclosures. If you're thinking about buying a foreclosed home in the near future, you need to be prepared for the process. While the process of buying a foreclosed home is similar to buying any other home, there are some differences you should be prepared for.
Types of Foreclosures
There are two types of foreclosures - bank-owned homes and real estate-owned properties (REO). Both of these types are owned by the lender. The primary difference between the two is the stage of the foreclosure.
A bank-owned home is in the middle of foreclosure, which means the homeowner has stopped making payments. At this point, the lender is taking steps to remove them from the home. Foreclosed homes are bank-owned properties that go to auction. If the home doesn’t sell at auction, it’s still owned by the bank, but it’s an REO. REO properties have been in an auction and still aren’t sold. The lender will often try to sell through them REO agents.
You can usually pay less for a foreclosure than other similar homes in the area, as they are sold well below market value. Foreclosures may also offer other benefits, such as lower rates and lower down payments. You may also be able to avoid closing costs and appraisal fees.
There are situations where you can find a deal on a distressed property, but it’s not bank-owned. This is known as a short sale. This is a point where the homeowner has gone into default, but the homeowner can still sell the property before they go into foreclosure. The lender will take less than the amount owed on the mortgage, offering a substantial savings on the property.
Buying a Foreclosed Home
If you want to buy a foreclosure home in Berks County, here's what you can expect:
Before you begin your search for foreclosures, you should get pre-approved for a mortgage. This shows that you're serious and will help you know how much you can afford. This is an essential step when searching for any home for sale in Berks County.
Find an Agent Experienced in Foreclosures
It’s important to have an agent on your side who’s experienced in dealing with foreclosures. If you don’t have a specific property in mind, they can help you find options in your area.
Make a Competitive Offer
When you find a foreclosure property, you don't need to be too competitive in your offer, as you are already getting a good deal. Just be careful not to go too low and have your offer rejected.
Get an Inspection
Foreclosed homes are sold as-is, so make sure you get an inspection, as any repairs are on your dime if you buy the property. An inspection will let you know what you're getting into so that you don't have any nasty surprises later hat you have to pay for. If any issues are found that you can't deal with, then you should move onto the next property.
The Risk for Buyers
Buying a foreclosed home may cost less, but it comes with more risks than a regular home purchase. There are often problems and hidden costs that you may not even discover in inspection. It’s also a slow process.
There’s a lot of paperwork when buying a foreclosure. Banks tend to be slow on their response times with these properties, and if a bank has a backlog of foreclosures, it can take months for them to respond to an offer.
Buying a foreclosed home in Berks County can be a great way to get into a home of your own with less money. Just make sure to be prepared for the experience and work with an agent who can offer their guidance and expertise. Contact Jim Ernst today to see how he can help you find the right foreclosure property for sale in Berks County.
Visit our blog every week for more real estate articles and local Berks County articles. We can help you find the perfect home for sale in Reading and the surrounding communities of Blandon, Boyertown, Douglassville, Exeter Township, Fleetwood, Kutztown, and Oley with our powerful property search tool.