Want to Buy a House? Consider These Options First
There are many ways to buy a house. While the most common strategy is to enlist the services of a real estate agent, buyers should investigate all available options to determine which is best suited for their needs. Home buying options can include: foreclosure auctions, bank owned property, for sale by owner, lease options, and a variety of creative finance options.
The decision to buy a house is often the most important financial investment people make. In today’s economy it is crucial to stretch housing dollars as far as possible to get the most bang for your buck.
Many buyers turn to foreclosure properties as this type of real estate is generally priced below market value. However, distressed real estate often requires substantial repairs as foreclosed property owners usually do not properly maintain the property. Others inflict damage on the home as their way to get back at the bank for repossessing their home.
Buying houses through public auctions requires special attention to details. Most auctions require buyers to present funds within 24 hours after submitting the winning bid. Buyers must conduct due diligence by researching public records to determine if a second or third mortgage is attached to the property, as well as tax liens or creditor judgments. It is also smart to determine if the foreclosed property owner has vacated the premises. If not, buyers are responsible for costs associated with eviction.
Another consideration of buying foreclosure homes is if the previous homeowner is allowed to buy back their house from the winning bidder. Some states grant evicted property owners the opportunity to repurchase their home within 30 days from the foreclosure auction sale. It is best to consult with a real estate attorney to determine state foreclosure laws.
Buying foreclosure homes through banks is a better option for buyers who have never invested in foreclosure real estate. Bank owned homes consist of properties that did not sell through auctions. Once banks regain ownership they remove liens and judgments in order to sell the property with a clean title.
Buyers of bank owned properties need not worry about evicted property owners buying back the real estate. However, this type of real estate is sold in ‘as-is’ condition and is not covered under any type of warranty.
Bank owned homes are placed for sale through each lender’s loss mitigation department. Buyers must obtain preapproved financing prior to submitting purchase offers. Banks typically do not engage in price negotiations unless significant damage is discovered during the property inspection.
For sale by owner properties can be a good choice for buyers who possess sufficient knowledge of real estate transactions. FSBO properties are often priced lower than homes sold through realtors because sellers do not have to pay commissions.
It is best to work with a real estate attorney when buying homes directly from sellers. Buyers should obtain property inspections and real estate appraisals to ensure the home is worth the asking price.
Lease options can be a good choice for buyers with bad credit and those unable to afford a large down payment. Lease options must abide by state laws, so it is recommended to hire a lawyer to execute real estate contracts.
When a lease purchase option agreement is used, buyers reside in the home as a tenant. Buyers normally provide a small down payment and a portion of monthly rent payments are contributed toward the purchase price. Lease options normally extend between 2 and 4 years. At the end of the contract buyers must qualify for a home mortgage loan. Otherwise, they will default on the contract and could lose all funds contributed toward the purchase.
These are just a few ways to buy a house. Buyers may also want to investigate entering into other types of owner will carry financing such as seller carry back mortgages or subject to contracts. By taking time to investigate all available options buyers can locate discounted properties that allow them to obtain instant home equity. We buy Houston houses and pay cash.