When an individual falls behind on his or her mortgage payments, the lender may foreclose on the home and the home may be sold at auction. If you are interested in buying a home, you may be interested in participating in one of these foreclosure auctions. The process of buying a home at an auction is much more complicated than it may seem. It is important for anyone considering this option to fully evaluate the possible risks and benefits associated with buying a home at auction.

You May Not Be Able to See the Home Before You Buy It

One of the biggest risks associated with buying a house at auction is that potential buyers often have little information to go off of. The auction notice may offer some property information. However, there is no way to know exactly what type of condition the property is in. Potential buyers cannot have the home inspected. In most cases, they are not even allowed to walk through the home to evaluate the interior of the house. Many enthusiastic buyers have been shocked to realize that a home they thought was a great deal actually needs tens of thousands of dollars of cleaning and repairs. Because you cannot see the condition of the home, it is very difficult to accurately estimate the value of the home and offer a reasonable bid.

The Property May Contain Liens or Encumbrances

Another major risk associated with buying a foreclosure is that the property may have liens or encumbrances on it. If the home was foreclosed because of unpaid property taxes, the foreclosure may eliminate any liens on the property. If a home is foreclosed because of a delinquent mortgage, superior property liens may survive the foreclosure. Banks may pursue the home’s new owners for a lien settlement. Consequently, it is essential for potential buyers to perform a title search to learn about any liens and obligations the buyers will be responsible for. If you are thinking of buying a foreclosed home, working with a skilled real estate attorney is the best way to ensure that you do not end up responsible for liens and encumbrances you did not know about.

When you are a first-time homebuyer, the experience of shopping for your home can be confusing and overwhelming. While you are probably excited to find a place that you can make your home, you are also likely to be very cognizant of the financial side of things. Things such as the interest rate of your mortgage, taxes on the property, and the cost of the home itself can all affect how much you can expect to pay for your home. However, there are also other costs that many people forget about during the home buying process - closing costs. Understanding what your closing costs are and what the funds are used for is an important step toward purchasing a home.

What Are Closing Costs?

When you purchase a home, there are certain fees associated with the closing, or finalization, of the purchase. These costs together are typically referred to as closing costs and include a variety of fees and charges. In general, closing costs usually total to be around 2 to 5 percent of the total purchase price of the home, though the final costs largely depend on the location you are purchasing the home and other factors.

What Is Covered by Closing Costs?

There are a variety of things that the closing costs pay for. You will be able to see all of these itemized costs listed out on the estimate given to you by your lender, but typically they include things such as appraising the home, the cost associated with performing a title search, etc. Items that are often lumped together under the umbrella term of closing costs can include:

Shopping for a new home is an exciting process, especially once you find a home that fits everything on your checklist. Purchasing a home is a big accomplishment for many people, but the process that you must go through can be confusing and overwhelming for many people. Before you can move into your new home, there are a few things that you need to take care of on the legal side. No home sale can be completed without a contract, also referred to as the purchase agreement, in addition to an array of other forms and documents. Your purchase agreement is one of the most important documents involved in the home-buying process. Once you and all applicable parties sign the agreement, it is considered to be legally binding, which is why you should know what is included in the agreement you are signing.

Components of a Home Purchase Agreement

Once you have found your dream home, you will have to submit your offer to the buyer in written format. Certain information is always included in the purchase agreement, such as the contact information for both the buyer and the seller, a description of the property, including the property’s address, the purchase price, the condition of the property, and any items that may be included in the sale, like the appliances. In most cases, there will be other conditions that need to be met before the agreement can be valid. These are called contingencies, which spell out the rights and obligations of both the seller and buyer. Some of the most common contingencies include:

• Being able to obtain certain financing terms
• Any requested seller assist, which usually involves closing costs
• Results of the home inspection
• Your desired closing date
• Your date of possession
• Selling your existing home

If certain contingencies are not met, your sale will not be completed. You can have your attorney write the terms of the contingencies into the contract, such as your right to walk away from the sale if the contingencies are not met.

If you are a first-time homebuyer, there are many legal terms with which you may not be familiar. In residential real estate terms, a deed is a document that proves the transfer of a title of a specific property from one individual to another. A title is the legal right to use and alter the property if the owner so chooses. With a title, the owner can also transfer interest or any portion to others through the deed, which represents the right of the owner to claim the property. The main difference is the title describes or names the primary holder of the property, whereas the deed is the official legal document that is filed.

The Importance of a Title

There is an old saying, “What is in a title?” Basically, title is the legal term that refers to ownership of something. It may be helpful to think of the word “entitle,” which means having ownership or control over something. In real estate, that would be property. A title is a very important element in residential real estate transactions. When a person holds a title to a home, they possess the legal rights, ownership control, and responsibility of that house. Titles can be held by a single person or by two or more individuals, such as a married couple or an adult and his or her parents. It is important to note that titles can also be held by corporations, organizations, and trusts where all the involved parties share certain ownership rights.

Details of the Deed

A deed is the actual paperwork that is signed by someone who is selling or transferring over the rights to their property, and this person is typically known as the grantor. The person buying or taking possession of the home is referred to as the grantee. The deed includes the names of the property’s seller and the buyer, and the seller must sign it to confirm the transfer of ownership.

Commercial and residential real estate matters can be complicated since they often involve a lot of paperwork and legal terminology. However, it is important to understand all of the terms to avoid losing time or money. One such real estate issue many people may not be familiar with is a mechanic’s lien, which is a legal document that is filed against a house or other similar type of property. Mechanic’s liens are a means by which subcontractors and suppliers can seek payment for upgrades or enhancements that were performed on a property if they are not getting paid per the terms of their contracts.

Making Home Improvements

Homeowners can face a mechanic’s lien even if they do not miss repair or home improvement payments. For instance, if you have your kitchen remodeled and the contractor does not pay the material supplier, that individual or company can put a lien against your house as a way of recovering the money they are owed. You are then responsible for paying any subcontractors, suppliers, or workers for their labor (time) and materials.

Many homeowners do not know that even if they already paid a contractor for work, if the other parties or tradesmen involved in the project are not paid by the main contractor, the subcontractors can come after the property on which the work was performed, such as a house. Ultimately, if you own a home, you may be required to pay for the work a second time, or worst-case scenario, you may have to sell your house if you cannot afford these extra costs.