Buying a foreclosed property in Downtown Boston could be your chance to land a gem of an investment at a very nominal price. It is important to note, however, that there are a number of serious risks that must be accounted for. If you don’t know how to mitigate these risks, this type of investment could set you up for considerable loss. Following are the basic benefits and drawbacks of buying foreclosures.
The Benefits of Buying a Foreclosure
Buying a foreclosed condo in Downtown Boston will allow you to get a price that’s well-below market value. For many consumers, this can even make all-cash transactions possible. With an all-cash transaction, there are no interest rates to worry about and closing costs are significantly lower. If a foreclosed home gets lender approval, buyers with insufficient spending power for purchasing homes on the traditional market can secure smaller loans for their far more modest financing requirements.
Gain an Advantage at the Negotiating Table
When homeowners are in pre-foreclosure, they’re usually looking to wrap things up as quickly as possible. This puts buyers at an incredible advantage at the negotiating table. It also ensures a swift closing. There are foreclosures and pre-foreclosures available at all price points, and it’s also possible to find options that are only in need of very modest repairs.
The Drawbacks of Buying Foreclosures
Due to their below-market prices, foreclosures tend to draw massive amounts of attention. Thus, although a low listing price might lure you in, you could find this price quickly escalating. Buyers should know that foreclosures aren’t necessarily cheap either. Sellers who are in pre-foreclosure may price their properties higher than their actual value in an effort to pay off their mortgage debt. Worst of all, getting financing for a foreclosed home can be a lot harder than financing a traditional purchase. Lenders are often reticent to back buyers in these transactions due to the additional risk they entail.
There’s also the potential for these properties to be in a considerable state of disrepair. When unable to pay their mortgages, most homeowners don’t invest in important improvements or repairs. Moreover, foreclosed properties bought at auction are sold without proper home inspections. Auction foreclosures often make it necessary for buyers to make same-day, all-cash payments as well. In these instances, investing in foreclosed properties is done at a tremendous risk and may or may not provide worthwhile payoffs.
Navigating the home buying process can be tricky, especially if you’re considering foreclosed properties. Working with an experienced agent who is familiar with the area as well as foreclosures can help you minimize your overall risk and maintain your long-term financial goals. For more information on condos for sale in Downtown Boston, call us and schedule an appointment today.