With the Denver market being one of the hottest in the Country – many buyers are looking to buy a foreclosure in Denver. These are defaulted properties that have been repossessed by the bank or lender and put back up for sale, often listed at a significant discount. A number of benefits make buying a foreclosure property worth considering, and in this post we’ll look at why they could be a good choice for you.
Perhaps the most obvious is cost-savings. Lenders are eager to sell foreclosures, so it is not uncommon to pay below-market rates, have a reduced down payment, and even favorable closing costs.
Foreclosures are also sometimes sold for the amount outstanding to the mortgage lender. So if the previous owner made a large number of mortgage payments before the property went into foreclosure, future buyers stand to benefit from an especially low purchase price.
Foreclosure homes don’t have only financial benefits, however. In some cases buyers can also enjoy the security of not being responsible for any liens, mortgages, or back taxes on the property. This gives buyers a chance to immediately begin accumulating equity, which can happen especially quickly if there are a number of foreclosures in a neighborhood for sale at the same time.
In Colorado the majority of foreclosures are nonjudicial. This means that the foreclosure is handled by a trustee outside the court system. But Colorado is unique because its foreclosures are handled by public rather than private trustees. These are neutral third parties designated by the lender to conduct the foreclosure sale, making the process more efficient and less costly.
Foreclosures in Denver are typically sold by public trustees at auctions. In Colorado, foreclosure auction sales must be announced to the public, and held at the set time, date, and place. These announcements can often be found in local newspapers or on local real estate websites.
At an auction the property is sold “as is” to the highest bidder, with the minimum bid set by the lender. This is typically the outstanding principal on the property, plus interest and any penalties incurred by the borrower’s defaulting on the loan. Though an open auction can result in escalating bids, buyers still stand a good chance of buying a foreclosure at reduced market rate.
It is important to note, however, that auction sales might not have Title Insurance. This means that buyers will assume responsibility for liens and other debts on the property. In this case a realtor can help prospective buyers conduct a title search on a property to determine its financial history and debt obligations. So be sure to do your due diligence before committing to a bid.
If the foreclosure is not sold to a private bidder at auction, then the property will be bought by the lender at the minimum bid price and sold privately through a realtor. Though it depends on a number of factors, buyers can often find foreclosure homes at especially low prices at this stage in the foreclosure process, since lenders are especially eager to offload the asset.
If you are able to buy a foreclosure home in Denver can be a great opportunity to enter the housing market. You can build equity quickly and enjoy the benefits of a reduced mortgage and even closing costs.
But the process can complex, especially if you are buying a foreclosure ‘as is’ at an open auction. So it is recommended that you work with an experienced realtor who can help you each step along the way. If you think this might be the right choice for you, check out our listings of Denver foreclosures and get in touch to learn how we can help you find the right home at the right price.