Monday, May 21, 2012
What is the difference buying a foreclosure home and a bankruptcy home?
Mrs. Pearlie asked:
Just like to see if the prices would be different? I know that foreclosure homes are cheap, but are the bankruptcy homes cheaper or?
Just like to see if the prices would be different? I know that foreclosure homes are cheap, but are the bankruptcy homes cheaper or?
Whats the catch?
Anything would be appreciated.
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The legal process to force the sale of the home is different, but the end result is the same. Both the lender (in a foreclosure) and the bankruptcy trustee (in a bankruptcy, obviously) want two things that are not compatible. First, they want to sell the home as quickly as possible, which means they have to sell at a discount. Second, they want to maximize the price for the home, which means they initially put the property up for sale at a price above what they are wiling to accept.
These homes eventually go cheaper than other homes in the community. However, people often “trash” homes when they go into either bankruptcy or foreclosure. Make sure any purchase contract you sign has a clause that says you can back-out of the contract if a certified home inspector says there is damage.