Foreclosures are risky investments that can yield big returns if you know what you’re doing.
Buying a foreclosure in Atlanta, Georgia can pay off with a little persistence.
With the local real estate market teetering on unaffordability you can be sure to find several foreclosed properties in the area for sale right now.
What makes a foreclosure so attractive? Well, the primary draw is that these homes are cheaper than market value, so they are very attractive to people looking to get into home investing.
How To Buy A Foreclosure: Everything You Need To Know
This article will tell you everything you need to know about buying a foreclosure.
What Is A Foreclosure?
A foreclosure is a process in which the deed holder of a property seeks to take ownership of it, usually due to unpaid debt.
Here’s how a foreclosure typically works: For one reason or another, a distressed homeowner finds himself or herself in danger of defaulting on their mortgage. When a mortgage payment or perhaps several payments is missed, the bank sends the homeowner a notice of trustee’s sale.
Because the debtor loses possession — and rights — to the home, the lender will look to sell the home under its value.
This makes the home especially attractive to investors. Meanwhile it is an understandably emotional transaction for the previous owner.
Is It Smart To Buy A Foreclosed Home?
Buying a foreclosed home is a great way to get a property for less money than it’s worth. Buying a home in pre-foreclosure — meaning, before it enters the foreclosure phase — may be when the owner is at their most motivated state.
That being said, the wisdom in buying a foreclosure rests entirely with your plans to profit from it. If you don’t have a plan, then buying a foreclosure may be a terrible idea, especially if you don’t get a home inspection done.
Now let’s go over some steps you need to buy a foreclosure. There are three ways you can buy one:
But first, you need to know where the foreclosures are U.S. foreclosure filings are down across most of the U.S., but they’re up double digits in these cities:
- Baton Rouge, Louisiana (43%)
- Atlanta, Georgia (up 25%)
- Salt Lake City, Utah (up 17%)
- Orlando, Florida (up 16%)
- Portland, Oregon (up 16%)
Now, if you live in one of these cities, all you need to do is get a foreclosure filings list to see the properties. Let’s go over the three ways you can buy a foreclosure:
In Pre-Foreclosure
If you learn that a home is in pre-foreclosure, that means that the bank or lender has notified the homeowner that they plan to foreclose on the property.
This creates a motivated seller. If you happen to approach the homeowner about selling the property, you can get it for a good price.
The key to buying a pre-foreclosure home is to get while the owner still has control. Once the property goes into foreclosure, the owner loses all rights and you have to deal with the bank.
What’s different about buying a home in pre-foreclosure is that, you typically have to pay the following:
- Loan balance
- Any liens on the property
- homeowners insurance
After that, you take over possession of the home from the seller. Again, remember to handle the transaction with all due care, dignity and respect.
Where To Find Pre-Foreclosure Homes
You can find real estate listings that will show you plenty of pre-foreclosure homes.
You may also try to get the a distressed property at foreclosure. Let’s talk about it:
At Foreclosure Auction
A foreclosure auction often takes place on the courthouse steps. The Sheriff conducts the auction and ensures that order takes place.
A bailiff or another official may preside over proceedings, reading out properties from a foreclosure list. All you have to do is be present and bid on the properties to participate.
Be wary of some foreclosures if you haven’t done your research or driven by the properties. Many of them are uninhabitable and may required extensive repairs.
If you end up buying a money pit, you’d better have a plan. That’s because once you buy a foreclosure, you’re liable for all expenses related to the home.
Bank-Owned Property
You may choose to buy a property straight from the lender. This is typically considered a bank-owned property.
The bank has a right to hold onto a property as long as possible, so be aware that sales often take months and maybe even years.
Where To Find REO Properties
- Familiarize yourself with the Multiple Listing Service (MLS), which has a list of REO properties.
- Contact Realtors: Real estate agents know where all the REOs are in any given area.
- Go online and Google search “REOs near me” to find listings in your area.
With any real estate transaction, make sure you get in touch with a real estate attorney so that you’re protected legally.
Final Thoughts
When you buy a foreclosure, you have to purchase it with cash, so you should make sure that your money is right.
Ether you have to put together a plan to save or take out a loan. Either way, you need to have cash money. So here’s my closing advice: Count the cost.
Atlanta has one of the best real estate markets in the country, with affordable housing in every quadrant of the city. Large backyards, manicured parcels and strong neighborhoods with ample dining amenities make it one of the top places for transplants.
Keep up with what’s going on in Atlanta’s real estate scene here.
