The Difference Between Buying A New Home And A Foreclosed Home
Many people are of the belief that the best real estate investment lies in foreclosures. While there is no question that one can find some exceptional deals in foreclosures this does not necessarily mean that buying a new home cannot offer some of the same if not better deals. There are pros and cons for each argument and it would be well worth your while as an investor to understand both sides.
Buying a New Home
The obvious caveat of buying a new home comes with the warranty protection that you will get. New homes have this added protection in the event that something goes wrong with the building that is a result of inferior materials or poor construction workmanship. New homeowners have the luxury of knowing that they will not be responsible for out of pocket repair costs if something were to happen.
Those who choose to buy new homes also have the advantage of better financing options. Some incentives set in place can save you thousands of dollars off the total cost of buying the property making it that much easier to secure adequate financing for the home of your choice.
Finally, when purchasing a new home you can often work directly with the builders to get the home you really want. If you begin the deal early enough you could customize certain features of the home; choosing the right cabinets, floors, and space design well before the home is completed. This means that you can end up with a home that will reflect your personal tastes and personality.
Buying a Foreclosed Home
By contrast purchasing a foreclosed home may get you lower prices overall but you also have to make some sacrifices in the process. There are a number of risks and challenges that come with purchasing these types of property. For the most part these homes come “as is” leaving you with no warranty or protection if something goes wrong.
In many states by law, any home set for resale is required to come with a “full disclosure” clause that should clearly point out any particular problems that the property must have. However, with foreclosures this is not the case so the buyer leaves himself vulnerable to any number of difficulties and challenges that may come along. If something were to happen the buyer has no possible recourse if problems are found later on.
Finally, there are always the many financing challenges that may come up. While you may have the luxury of securing financing after you’ve found the home of your choice, it is strongly recommended by many realtors that you secure your financing well-before you begin your search for the foreclosed property. At the very least this phase must be completed before you begin the bidding process.
There is no way to tell anyone which real estate investment option is the right one for you. Your decision will depend on your personal expectations and circumstances. However, understanding the common misconceptions that come with investing in real estate is a major step that everyone should take to make the transition to home ownership much more attainable.