As we approach the end of 2020, some analysts predict the number of foreclosures will rise. The Albuquerque housing market remains strong, but Coronavirus shutdowns have damaged the economy, and unemployment has remained high.

It's important to be prepared for the experience of dealing with foreclosure if you're hoping to find a great deal. Buying a foreclosure has many aspects similar to buying any other house, but if you know what to expect, your process will go more smoothly.

Types of Foreclosures

Foreclosed homes fall into two general categories. Home foreclosures include bank-owned homes and real estate-owned properties (REOs). In both cases, the lender is the owner of the home. Foreclosure stages distinguish the two.

A bank-owned home is in foreclosure, meaning the homeowner is not making payments, and the lender is taking steps to remove the homeowner. Bank-owned homes are sold at auction when they are foreclosed. A bank-owned REO property remains the property of the bank even if it doesn't sell at auction. In spite of being auctioned, REO properties haven't been sold yet. REO agents are usually used by lenders to sell them.

The prices of foreclosures are often significantly lower than similar properties in an area. A lot of foreclosed properties are sold at well below the market value. Buying a foreclosure can also help lower your interest rates, reduce your down payment, and save you money on appraisal fees and closing costs.

Some deals on distressed properties can be found in situations where the property isn't bank-owned.

Pre-foreclosure is one example. It means the lender has notified the borrower they have defaulted, but they might be able to avoid foreclosure if they sell the property. In short sales, lenders take less for the property than what's owed on the mortgage. Lenders can approve a short sale even when you aren't in default.

Buying a Foreclosed Home

If you want to buy a foreclosure, the following are the steps to expect:

Mortgage Preapproval

Before looking at properties in Albuquerque foreclosed by banks, preapproval for a mortgage is a good idea. A preapproval will show you're serious about buying, and it will help you narrow down your search.

Find an Agent Experienced in Foreclosures

It's important to have a foreclosure expert on your side. They can also help you find properties in your area if you don't have a specific property in mind.

Make a Competitive Offer

Even if a property is in foreclosure, you may still have to make a competitive offer. It is likely you will receive a substantial deal, but if you make an offer that is too low it may not be accepted.

Get an Inspection

Foreclosed homes are bought as-is. There will be no repairs made by the seller. When you buy a property, whatever is needed becomes your responsibility. If you make an offer, you need to know what you're getting into. If you do an inspection and you find too many problems, you should pass on the property. In the inspection, whatever is found is not going to be a strong negotiation tool - it's only there to help you decide.

You cannot do an inspection when you buy a house at auction. You don't even have the opportunity to see the inside of the home before you bid.

The Risk for Buyers

Buying a foreclosed home comes with a lot of risks. A property inspection may fail to reveal hidden problems or costs. Moreover, it's a long process.

When you buy a foreclosure, you have to deal with a lot of paperwork. The response times for banks to offers on these properties are usually slow, and if a bank is behind in foreclosures, it may take months before they respond.

It doesn't mean you shouldn't consider buying a foreclosure. To be prepared for these hurdles, you simply need to be organized.

Contact us today to help you buy or sell your next home in Albuquerque. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.

 

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