Foreclosures & Pre-foreclosures – Advantages and Disadvantages

Everyone is aware of the current real estate crisis and increased foreclosures going on in the States. But what many people may not be aware of, is that there are some great values available if you are looking to purchase a house or property. Whats different now then in the past, is that not only are numbes of foreclosed at all times highs but the quality is much higher as well.

The timing for researching on a great deal for a new house couldn’t be better then it currently is, but first you should be aware on the pros and cons of purchasing homes through a government auctions as compared to the standard way using a realtor.

Here are some advantages to purchasing a foreclosed or pre-foreclosed home:

- The main advantage in purchasing a foreclosed home is the below market price.

- More often then not the properties are in very good condition relative to price.

- The selection range of home available to choose from is extensive.

- No Realtors to have to go through or agency fees to pay (although you should still get advice from someone who knows something about real estate).

- Insurance is optional. Results in additional monthly savings.

- Great investment opportunity (i.e. rent out or flip that house)

- Not as risky as stock investing, plus you will own something of physical worth.

Disadvantages:

- Mortgages may be harder to get (unless you have great credit with your bank).

- Need to be mindful of existing liens or taxes that have not been paid on the property.

The most important thing is to make sure that the home you’re interested in is clear of all liens. You should also find out in advance what payment options the government auction will allow, and if required have your bank loan in place ahead of time. Make sure you have some decent cash saved up just in case, just as you would for purchasing a house through an agency.

Government auctions are being held all around the US and Canada. You can find information about upcoming auctions and pre-foreclosures (homes you can buy before the auction) on the internet along with detailed listings on the homes that will be for sale. Purchasing a home through a government auction can be a very rewarding adventure but doing your research ahead of time will allow you to be prepared. In fact I would recommend attending a few auctions before you are ready to purchase so that you become familiar with that environment.

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