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buy an NJ foreclosure property

Is it Smart to Buy an NJ Foreclosure Property in 2021?

On Behalf of Veitengruber Law | Nov 19,2021

Many programs that were initiated to help struggling homeowners stay in their homes throughout the pandemic have now ended. This is expected to lead to a dramatic increase in foreclosed homes on the market. Purchasing a foreclosed home can allow you to get a great home at a price that you can afford. But if you are shopping for a foreclosed home you need to understand what to look for as well as the potential pitfalls when you buy an NJ foreclosure property.

You have a few options when it comes to purchasing a foreclosed home:

1.  Short Sale

A short sale can occur before the foreclosure process has been completed. A homeowner may choose to sell their home for less than what they owe their lender instead of going through foreclosure. In this instance, you will work directly with the homeowner’s real estate agent like a normal home sale but the lender is the one who needs to approve the offer. You may spend some time waiting for approval.

2.   Buying at Auction

Buying a home at auction is a faster way to purchase a foreclosed home. You will not have to go through a negotiating process or wait for approval. Most sheriff sales, however, are cash payments. If the auction does have an option to finance, you will need to come with pre-approval ready. Auction homes are also purchased as-is, meaning you will not be able to have the home appraised or inspected.

3.   Buying from the Lender

You may have the opportunity to purchase a foreclosed home directly with the lender’s real estate-owned (REO) inventory. The lender will have already cleared the title and evicted the previous homeowner. Typically, you will need to work closely with an experienced real estate agent and attorney to go this route. While these homes typically sell as-is, you will have the chance to have an inspection before closing.

There are certain risks you should be aware of when purchasing a foreclosed home. You will likely face a lot of heavy competition to purchase a foreclosure. Real estate investors are experienced in purchasing foreclosures, have the funds for a cash purchase, and won’t ask for a lot of contingencies. You also need to be aware that the condition of a foreclosed home isn’t disclosed and you likely won’t know the true condition until after the purchase has gone through. Researching as much as you can about the home prior to purchase will help you determine if buying the property truly makes sense financially.

With all of that being said, it is very possible to find great deals on foreclosed homes that just need a little elbow grease to see their full potential. Foreclosed homes are especially good deals for homeowners who are handy with repairs. It can get expensive to contract work out to the pros, especially if the home needs some major repairs. The more you can do on your own, the less you will need to spend to add value to the property.

As with any real estate deal, enlisting the help of real estate professionals can help ensure you are protecting your investment and making the right choice by purchasing a foreclosure property. Veitengruber Law is an experienced real estate law firm with a lot of experience dealing with foreclosures. With us as part of your team, we can work together with you to achieve your real estate goals.

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