Buying a home can be a complex and sometimes confusing process. It is not something that most people do very often, so many years can often pass without going through this process. There are so many options out there today for buying a home that it only adds to the complexity. Boundary Title is here to help explain the different processes to help you understand the differences.
Foreclosure Vs. By Owner Vs. As-Is Vs. Agent Listed
If you search for homes for sale online, you might find foreclosures, by-owner listings, as-is listings, and agent-listed homes. But what do all those things mean and what is the difference? Understanding how each of these types of listings works is crucial to getting the best deal and getting to the closing table quickly. Dive into the details below as we explore the pros and cons of each of these options to help you decide which one is right for you.
Overview Of Foreclosure Sales
Buying foreclosure properties became very popular during the mortgage crisis of the late-2000s. Many buyers were looking for great deals, and there was no shortage of foreclosed properties up for sale. But you might be wondering exactly how a foreclosure sale works, so here are the basics.
Foreclosure sales come in many different stages. You may see pre-foreclosures, short sales, sheriff’s sales, bank-owned properties, or government-owned properties. The stage of foreclosure really depends on how far past due the mortgage has become. Foreclosure sales can offer several benefits – the main one being the bargain. Foreclosure properties can sometimes be purchased well below market value. However, foreclosures also present many risks.
Some of the risks associated with foreclosures include the following:
- Hidden fees
- Lengthy process
- Financing Challenges
- Property Not Well Maintained
There is a lot of paperwork and waiting associated with a foreclosure sale. In addition, back taxes or additional liens may be present on the property, and many lenders steer away from financing foreclosure deals. Finally, many foreclosed properties have not been well maintained, and some have even been completely trashed. But, if you have cash for the purchase and do your due diligence, foreclosure could be a great way to get a stellar deal on a home purchase.
How For Sale By Owner Works
You’ve probably driven by a home before with a sign in the yard that states, “For Sale By Owner.” It would seem obvious that all homes that are listed for sale are being sold by their owner, but a true “For Sale By Owner” home describes one that is not listed with a real estate agent. So, what are the pros and cons of this type of listing?
First, a home that is “For Sale By Owner,” or FSBO, can sometimes have a better price point than comparable homes listed with an agent. The reason for this is because the seller will not have to pay a seller’s agent commission fee. This can save you a little money on the purchase. Additionally, since there is no seller’s agent, the buyer can work directly with the seller instead of negotiating a deal through an agent. This can sometimes lead to better agreement between both parties. FSBO properties do have some drawbacks, though.
A property that is for sale by the owner can sometimes take a little longer to close unless both the buyer and seller remain on top of the transaction. Similarly, small problems that arise during the transaction could derail the whole thing. Since most buyers and sellers are not experts at real estate transactions, there may be no one with the expertise to overcome issues that arise.
Buying A Home As-Is
As-is properties are purchased just as they are without any warranties or home inspections. These types of properties are often heavily discounted, so buyers looking for a deal are often interested in as-is properties. An as-is property may be listed with an agent, or it could be for sale by the owner. The biggest advantage of buying an as-is property is the bargain that you can potentially get.
On the flip side, as-is properties can present some problems. First, an as-is property may have serious structural or cosmetic issues. Since you usually won’t know the full extent of any issues with the home at the time of purchase, it could end up costing you thousands of dollars to perform suitable repairs. For this reason, most lenders will not finance as-is properties. You’ll need cash or private funding to buy these homes, but if you do all your homework, you could end up with a great home at a great price.
The Basics Of Agent-Listed Home Sales
Agent-listed homes are probably the most common type of home sale in the country today, and there are thousands of real estate agents who sell homes every day. When a real estate agent lists a home for sale, they typically handle all of the marketing, showings, and details of the transaction. In most cases, having an agent sell your home means that it will get sold faster and the sales price is typically higher. An added benefit of having an agent in the transaction is the fact that they can help resolve issues that arise during the sales process.
If you are buying a home that is listed with an agent, one negative is that you will likely have to offer the seller a higher sales price since the seller will need to pay the agent a commission. Also, remember that the seller’s agent is looking out for the best interest of the seller. It is always a good idea to have a buyer’s agent represent you when you buy a home.
Choosing The Right Type Of Real Estate Transaction
With so many options out there for buying real estate, make sure you understand the ins and outs of different types of transactions. Each one has pros and cons, and the right one for you depends on your personal situation. With the right research and planning, you can find the right method to get yourself the perfect home. For all of your real estate needs, contact us at Boundary Title.