Buying a property is a big step and a very serious decision that will affect you for a very long time. There are many different reasons you would want to buy a property, and many different options for property you could buy. There are different ways to purchase homes and you should choose the way that best suits your needs, financial situation and preferences.
What is a repossessed home?
When an individual wants to purchase a home, they will usually have to apply for financing from a financial service provider in order to afford the property. The financial service provider will want to know two things before they will approve the loan for the property.
- They will want to see that the individual has a regular, steady income that will cover their essential living costs as well as their monthly loan repayments and interest.
- They will also want to see that the individual has a good credit record and is a client that represents little to no risk.
Because any individual’s financial situation is unpredictable, and because things can change in a very short amount of time, sometimes the client may not be able to afford to make a payment in full or on time. When this happens, the financial service provider will give the client a warning and if the client does not make good on their payments, the financial service provider will repossess their home.
They will usually keep the property for a short holding period to allow the client a last chance to pay what they owe, but if they cannot make their payments, the financial service provider will then sell the house off to make their money back.
What are the downsides of buying a repossessed home?
The bank will usually want to make their money back as quickly as possible, and unlike other property sellers, they are not looking to make a profit. This means that they will not be making any improvements or repairs to the property when they sell it.
The downside to this is that often, repossessed homes are usually in a state of disrepair. You may be getting a low price on a property, but you will have to understand that the property will come ‘as is’ and any disrepair or maintenance will be yours to fix and finance.
You will also have to understand that if you have not noticed any one problem or fault in the property until you have already paid for the home, you will not be able to hold the financial service provider responsible for it.
The other downside to purchasing a repossessed property is that often, the previous owners will not be willing to give up their property. This means that they may not be happy to simply leave their house and allow the new owner to take possession of it. Even once you have purchased the home, if the individual’s do not wish to leave it you will have a serious legal battle on your hands to try to get them off of your property. This could be difficult, dangerous and expensive.
What are your other options for purchasing a home?
There are several other options for purchasing a home, beyond going for a repossessed property. You could look into purchasing a home in a private sale or buying a home through an acquaintance or friend.
Whatever you do, it is always a good idea to thoroughly inspect the property before your purchase it, to ask the opinion of a professional and to stick to your budget. It is a good idea to make sure that the property suits your needs and does not require any maintenance or repair that you cannot afford to do.