What are the benefits/drawbacks of buying a home with foreclsure/auction vs. rent to own vs. buying outright?

Question

My husband and I will be looking for a new home within the next 3-6 months. I have researched mortgage rates and we live in the northeast which has very high housing prices to begin with. I am considering all options above but was wondering if anyone had any advice regarding their own knowledge or experience of pitfalls that I should be aware of with each of these options. This will be an FHA loan and I really want a nice solid family home in a good school district and family neighborhood. Also any good places to search for these types of listings in the RI area would be appreciated everyone seems to want money for the search and I am leary to distribute my credit card to them

Answer 1

Your community college or local Adult Education organization may have classes you can take in buying distressed/repossessed properties in your area.

Auction sales are best left to the professionals, there are too many pitfalls for the unwary. Are they cash only? Are there liens on the property? (Probably yes, could be huge) Can you inspect before bidding? (Usually not) Has it been trashed/looted? (Usually yes) You usually have to have any financing in place before bidding. You are also competing with professional flippers who have been through this many times.

Some agents specialize in foreclosures/bank-owned properties, look around for one. Call local banks to see if they use a particular agency. Also many pitfalls here.

Rent-to-own can be a scam. What happens if the owner goes bankrupt? Buying outright is by far the simplest.

Answer 2

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