On a foreclosed home, will I pay the full price?

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Real Estate

On a foreclosed home, will I pay the full price? Or will I pay the mortgage balance?

Typically you will pay the price that represents the "fair market value" for the home. Perhaps this will be a little bit less than the current list price for the property? Perhaps a little more.

Each house that has been foreclosed on is treated a little differently. Many factors can influence what the asking price for the home is. Some homes are well taken care of. In this case, the lender might list the house with a local Realtor for a full market asking price.

If the house was in poor condition, perhaps because of neglect, or perhaps because the old owner destroyed it by removing appliances, fixtures, and other finish materials, the lender might decide to sell the property "wholesale" to an investor/flipper who will take the property at a discount.

Some homes are marketed by Fannie Mae or Freddie Mac if the original loan was guaranteed by one of those agencies. Many Fannie Mae homes are in quite good condition - check out the website for Fannie Mae Homepath Homes. Do a Google search for Homepath Homes.

And of course we should not forget that it is just as likely that the old loan could have been for much MORE than the current asking price. In that case, you wouldn't even want to buy the home for the old mortgage balance. So you can see that in most cases, homes that you see on the market are close to what would be "fair market value" for the home.

Of course there are many more factors to consider so I hope you find a trusted resource to guide you through the many different situations you may encounter.