Foreclosure Sale – How You Can Benefit From It

 A foreclosure sale occurs when a person who takes out mortgage against a property is unable to make his payments as per the schedule and the bank or the lender moves the court to sell the property in order to recover the amount that they are owed. When a mortgage is taken, there is a formal agreement between the buyer and the lender, whereby the lender retains a right over the title of the property until the time that the buyer makes all the payments towards the loan.

 A foreclosure sale benefits the mortgage lender, as it enables him to put the property on the market and utilize the sale proceeds towards recovering the amount due to him. In addition, a foreclosure sale can be beneficial to a prospective buyer who is looking to buy a property. How does it benefit a prospective buyer?

 For a first time owner who is on a budget, his dream home can get bigger if he is able to get it at a cheaper price during a foreclosure sale. Although banks try to make a profit out of foreclosure sales, in times when the real estate prices are in a slump, they may not be able to get the market rate and will be willing to sell it for the best offer. By looking out for properties that are being sold due to foreclosure, a buyer can get a bigger house than he normally would with his budget.

 A foreclosure sale can also benefit an investor who is looking at making gains through investing in real estate. By buying the property at a price lower than market rate, he could hold on to the property until the market picks up, so he can make a profit. Alternatively, he could spend a small amount towards refurbishing or remodeling and then resell at a higher price thereby gaining a significant profit.

 However, before you buy a property during a foreclosure sale, you should make sure that you understand what you are getting into. Evaluate the risks before taking the plunge. In some cases the house would not be open for viewing prior to the auction. Hence, you will not be able to assess the condition of the property and may have to spend a large amount additionally towards repairs. Make sure that you evaluate or get an expert to help before deciding to buy.

Written by Carol Pefley

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