If you take a look at Phoenix foreclosure listings, you may come across some great deals. However, there are a number of differences between buying a foreclosure property versus a traditional real estate transaction, so it is a good idea for you to familiarize yourself with the process of buying a foreclosure before you even begin your search.
What is a foreclosure?
A foreclosure is a legal process that a bank/lender takes in order to recover the balance of a loan that has been defaulted on by the borrower. However, when a property is referred to as a “foreclosure,” it basically means that the previous owner of that property had failed to make payments on their mortgage, so the bank/the lender took legal actions to take possession of the property in order to pay off the balance of the loan.
The foreclosure process will be different depending on which state your property is in; however, the two most common types of foreclosures are the judicial foreclosures and the non-judicial foreclosures. In a judicial foreclosure, the lender or other owed party (such as a taxing authority) forecloses on a defaulted mortgage by one of filing a suit and obtaining a court order. With non-judicial foreclosures, there is not intervention by the court, and the foreclosure process is governed by state statutes. In Phoenix, both judicial and non-judicial foreclosures are available to lenders/banks.
Risks and Rewards of Buying Phoenix Foreclosures
Buying foreclosures in Phoenix can actually end up being a profitable investment for many homebuyers since foreclosures are oftentimes (but not always) cheaper than traditional home sales. It is not required, but definitely a good idea to work with a real estate professional who is experienced in buying foreclosure real estate. Especially when considering that the laws governing a foreclosure process can be complex as well as the fact that foreclosures are more likely to have title issues (or “cloud on title”). Despite common belief, it will probably take a lot longer to close the deal on a foreclosure property than a traditional home purchase. This is mostly because the process of buying Phoenix foreclosures involves more people than just you and the seller.
How to Buy a Phoenix Foreclosure Listing
You have several options to choose from when buying Phoenix foreclosures. The first is to obtain listings through a local real estate agent. This may be the best option. A real estate agent will be able to help you get an idea of how much properties cost in a given area by showing you the comparables; they can give you some insight about the neighborhood; so on and so forth.
Another way in which you can buy a foreclosure is to attend an auction. Properties being sold at foreclosure auction will go to the highest bidder. You'll need to have your finances ready and your mortgage approved because and be required to pay-in-full on the day of the auction. Some auctions actually require that only real estate agents representing a buyer to be present. There are risks here, including the inability to have a home inspection and the fact that you are buying "as is." Yet, in the right conditions, this can help to keep costs lower.
Buying Foreclosures vs. Traditional Home Sales
Which is better? Should you be looking at Phoenix foreclosure listings or should you be looking at non-distressed homes on the market?
Because foreclosures are usually buy-as-is properties, you will more than likely have to absorb the responsibility of making the necessary repairs. Also, foreclosures (more specifically REOs) tend to have been left unoccupied and unmaintained for several months or even years, and as a result the condition of these properties are often unknown.
Before you start working on buying any type of home, consider contacting a real estate agent who is comfortable with buying real estate in the area. If you are set on buying foreclosures in Phoenix, it's critical to take the time to look for an agent that specializes in them. This will help ensure that you will have the first crack at the best properties as they come on the market. A foreclosure property can be a good deal, but only if you buy with a level head and with ample research first.