Several myths have surfaced over the years surrounding foreclosures in the real estate industry. Due to their complex processes, foreclosure properties are often misunderstood. Continue reading as we debunk five top myths surrounding the process of buying a foreclosure property.
Myth #1: Foreclosures occur because the original homeowners abandon their property.
Many people are under the misconception that most foreclosures occur because people choose to walk away from their homes. Instead, it is important to consider that the overwhelming majority of foreclosures are due to homeowners being unable to make payments. In many scenarios, foreclosures may also occur because the homeowner lost their job or their mortgage suddenly becomes unaffordable for them. While a homeowner walking away from a home is a potential cause, it is a less common occurrence than people assume.
Myth #2: Foreclosures are more susceptible to losing their value than traditional homes.
The idea that foreclosures are more prone to losing their value than traditional homes is a commonly believed myth. As you are searching for a home, it is important to remember that homes lose value due to factors such as market conditions and interest rates. The value of a home in the future will not be affected if it was sold as a foreclosure in the past.
Myth #3: You must be able to pay cash to purchase a foreclosure.
When it comes to bank-owned foreclosures, a buyer can still obtain a mortgage to finance the home. However, it is important to keep in mind that banks sometimes are more likely to accept offers from cash buyers.
Myth #4: Always go in with a low offer on a foreclosure.
Many buyers believe that because banks are trying to get foreclosures off their books, they should always begin by making a low offer. Even though banks usually have no interest in owning real estate, it does not necessarily mean that they are willing to take a huge loss on them. If you decide you are going to make a low offer, do not be surprised if it is quickly rejected.
Myth #5: You cannot get an inspection on a foreclosed home.
The vast majority of bank-owned homes permit buyers to conduct inspections before closing on the property. Banks understand that foreclosed homes often need repairs, and an inspection helps to ensure that the buyers have all the information they need to make an informed decision. Banks do not want to be held liable if the buyer has a problem after they purchased the home.
